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Blum and Kalvern's critique is posterior to the establishment of the Coase Theorem by Stigler. But it was not the first critique raised against Coase. Calabresi was the first one to level a specific criticism at the Coase negotiation result—namely that the result does not hold in the long run (Calabresi 1965, n. 28, p. 730). Calabresi later (1968) acknowledged his mistake but what is important is that the literature up to that point had not leveled an incorrectness claim (on Calabresi and the Coase theorem, see Marciano 2010). I thank Steve Medema for having stressed this point to me.
This was one of the most interesting part of the discussion in the 1968 conference on liability that Stigler attended, as a member of the organizing committee. He did not present a paper and did not much participate in the debates. The few words he said are particularly important and significant. For him, the existence of transaction costs did not prove anything about the Coase theorem: “everybody says that once we put transaction costs in, we are playing in a different ballpark. But that is not so… When people say that the theory no longer holds once we have departed from the zero transaction case, they are making what I think is an unfounded conjecture” (Stigler in Manne 1970, p. 124). It only evidenced a lack of methodological concern or a prejudice against theory: "I should like to start by complaining against the anti-theoretical attitude of all of the speakers" (Stigler in Manne 1970, p. 124).
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Marciano, A. Ronald Coase, “The Problem of Social Cost” and The Coase Theorem: An anniversary celebration. Eur J Law Econ 31, 1–9 (2011). https://doi.org/10.1007/s10657-010-9200-0
- Transaction Cost
- Social Cost
- Market Failure
- Unrealistic Assumption
- Coase Theorem