Wednesday, December 29, 2010

Coasean Property Rights Without Pigouvian Externality Taxes Can Solve Environmental Problems

From The Percolator Blog, "Coase’s 100th Birthday: No More 'Externalities' " by by Terry Anderson:
Unlike the Pigouvian approach, which claimed that market failure could be corrected by taxes, subsidies, and regulations, Coase taught us to view these issues in light of property rights and markets. In short, Coase taught against the use of the word “externality.”
Read the complete blog post here.


  1. sorry but i your blog is in concise manner which i does not like....

  2. Hogwash! Coase himself admits that his theory works when property rights are clear and easy (requiring the creation of schemes like carbon credits, which the right-wingers that tout Coase oppose anyways) and transaction costs are low (which is rarely the case in environmental issues, such as air pollution). The Coasian solution is applicable to some situations, but we shouldn't be throwing out sensible regulation and pigouvian taxes as a solution. It was the asinine idea that markets work ecologically on their own that got us into this mess in the first place.