Coase theorem
E96716
The Coase theorem is an economic theory stating that if property rights are well-defined and transaction costs are negligible, private bargaining will lead to an efficient allocation of resources regardless of the initial assignment of rights.
Observed surface forms (1)
| Surface form | Occurrences |
|---|---|
| The Problem of Social Cost | 1 |
Statements (50)
| Predicate | Object |
|---|---|
| instanceOf |
economic theorem
ⓘ
theorem in law and economics ⓘ welfare economics concept ⓘ |
| addresses | problem of social cost ⓘ |
| assumption |
no wealth effects on marginal valuations in some formulations
ⓘ
parties are rational ⓘ parties have complete information ⓘ property rights are well-defined ⓘ transaction costs are zero or negligible ⓘ |
| concerns |
allocation of property rights
ⓘ
bargaining over legal entitlements ⓘ externalities ⓘ |
| coreIdea |
efficiency of resource allocation is independent of initial assignment of legal rights under zero transaction costs
ⓘ
with well-defined property rights and zero transaction costs, private bargaining leads to efficient outcomes ⓘ |
| field |
economics
ⓘ
environmental economics ⓘ institutional economics ⓘ law and economics ⓘ welfare economics ⓘ |
| implies |
government intervention is not necessary for efficiency under zero transaction costs
ⓘ
initial allocation of rights affects wealth distribution ⓘ initial allocation of rights does not affect efficiency under ideal conditions ⓘ legal rule affects distribution but not efficiency under zero transaction costs ⓘ parties can internalize externalities through bargaining ⓘ |
| influenced |
environmental policy design
ⓘ
law and economics movement ⓘ property rights economics ⓘ |
| limitation |
coordination problems with many affected parties
ⓘ
enforcement costs of agreements ⓘ information asymmetries can prevent efficient bargaining ⓘ real-world transaction costs are often significant ⓘ strategic behavior in bargaining ⓘ |
| namedAfter | Ronald Coase ⓘ |
| originatedIn |
The Problem of Social Cost
ⓘ
surface form:
article "The Problem of Social Cost"
|
| originatedYear | 1960 ⓘ |
| proposedBy | Ronald Coase NERFINISHED ⓘ |
| relatedTo |
First Welfare Theorem
ⓘ
Pigouvian taxes ⓘ
surface form:
Pigouvian tax
Ronald Coase NERFINISHED ⓘ The Problem of Social Cost ⓘ bargaining theory ⓘ externality ⓘ property rights theory ⓘ transaction costs ⓘ |
| usedIn |
analysis of bargaining solutions in game theory
ⓘ
analysis of environmental regulation ⓘ analysis of intellectual property disputes ⓘ analysis of nuisance law ⓘ analysis of pollution control ⓘ design of liability rules ⓘ |
Referenced by (3)
Full triples — surface form annotated when it differs from this entity's canonical label.
this entity surface form:
The Problem of Social Cost