tag:blogger.com,1999:blog-6737941.post5318063552534071137..comments2024-01-14T17:27:30.511-05:00Comments on Law, Legislation, and Lunacy: Coase on the CoastDavidhttp://www.blogger.com/profile/14364155797420903461noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6737941.post-75013878339544716062008-07-24T17:31:00.000-04:002008-07-24T17:31:00.000-04:00The relevant idea is in the second paragraph. Rona...The relevant idea is in the second paragraph. Ronald Coase noted it takes two parties to create an externality (smelly pig farms aren't a problem if they aren't located near anyone that can smell them).<BR/><BR/>The Coase Theorem (which isn't needed here but strongly related) says that if transaction costs are low--i.e. bargaining between two parties is easy--and one party is causing a problem for another (again, an externality), then the bargaining process will yield the same result no matter who has the right to what.<BR/><BR/>If Andy makes a lot of noise and it bothers Ben, if Andy values noise making more than Ben values quiet, the noise will continue regardless of who the judge says is in the right (Ben has the right to quiet or Andy has the right to noise).Davidhttps://www.blogger.com/profile/14364155797420903461noreply@blogger.comtag:blogger.com,1999:blog-6737941.post-70021718907978129522008-07-24T09:44:00.000-04:002008-07-24T09:44:00.000-04:00Would you define coase for those of us not in your...Would you define coase for those of us not in your class?Anonymousnoreply@blogger.com