Learn Before
Ronald Coase (1910–2013)
Coase's View on Economic Interactions as Transfers of Rights
Coase's Theory on Property Rights and Externalities
This economic theory from Ronald Coase, notably detailed in his 1960 paper 'The Problem of Social Cost', posits that the need for government regulation to correct externalities is determined by the clarity of property rights. [3] When property rights are clearly defined and enforceable, private bargaining between parties can often lead to an efficient outcome without state intervention. Coase argued that this private negotiation process ensures that those who are harmed are compensated and that those who might cause harm are incentivized to avoid such behavior.
0
1
Tags
Social Science
Empirical Science
Science
CORE Econ
Economics
Economy
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Related
Coase's Theory on Property Rights and Externalities
'The Nature of the Firm' (1937 Paper)
'The Institutional Structure of Production' (1992 Paper)
Coase's Inquiry into the Relationship Between Economic Interactions and Institutions
Coase's Investigation into the Foundations of the Economy's Institutional Structure
Coase's View on Economic Interactions as Transfers of Rights
'The Problem of Social Cost' (1960 Paper)
Coase's Theory on Property Rights and Externalities
Analyzing an Economic Transaction
A farmer sells a piece of land to a housing developer. From a perspective that views economic interactions as the exchange of legally defined entitlements, which statement best analyzes the fundamental nature of this transaction?
According to the perspective that views economic interactions as the exchange of rights, the primary value in purchasing a concert ticket lies in the physical piece of paper or digital file received.
The Nature of a Software Purchase
Beyond the Physical Object: Analyzing a Purchase
Match each economic transaction with the primary right that is being transferred, according to the view that all economic interactions are fundamentally exchanges of rights.
From the perspective that economic interactions are fundamentally transfers of rights, the specific entitlements a person acquires when purchasing a piece of property—such as the right to build, lease, or extract minerals—are ultimately defined and determined by the prevailing __________ framework.
A factory's nighttime operations create noise that disturbs a nearby resident who values a quiet environment. From the perspective that economic interactions are fundamentally transfers of rights, which statement best analyzes the core of this conflict?
A consumer pays a monthly fee for a music streaming service. Four economists are asked to describe the fundamental nature of this economic exchange. Which economist's description is most consistent with the view that all economic interactions are fundamentally transfers of legally defined rights?
Evaluating Institutional Frameworks for Water Rights
Learn After
Coasean Bargaining
Expansive Definition of Property Rights in Coasean Theory
Coase's View on the Reciprocal Nature of Externalities
Coase's Emphasis on Efficiency Over Equity
A factory's operations produce loud noise that disturbs a nearby residential community. According to the economic theory that private bargaining can lead to efficient outcomes when property rights are clearly defined, which of the following statements best analyzes this situation, assuming negotiation between the parties is possible?
Evaluating Private Solutions to Widespread Pollution
According to the economic theory that private bargaining can resolve issues of social cost, the fundamental problem to be solved is identifying which party is at fault for creating a negative effect and ensuring they are stopped or made to pay.
Evaluating the Practicality of Private Solutions to Externalities
Efficiency and the Initial Allocation of Rights
Match each component of the theory on private solutions to social costs with its correct description.
Analyzing Efficient Outcomes in an Externality Scenario
According to the economic theory that private bargaining can resolve social costs, the specific initial ______ of property rights is less important for reaching an efficient outcome than the clarity and enforceability of those rights.
A chemical factory's discharge pollutes a river, harming a downstream fishing business. Assuming property rights are well-defined and transaction costs are negligible, arrange the following events into the logical sequence that illustrates how a private, efficient solution could be reached.
Consider a situation where air pollution from thousands of individual cars is causing health problems for millions of residents in a large city. According to the economic theory that private bargaining can resolve social costs, why is a negotiated agreement between all parties unlikely to be an effective solution in this case?