Lecture 4 – the Coase Theorem：讲座4–科斯定理.pptVIP

Quint - Patent Pools Econ 522Economics of Law So far, we have… Once we have private property rights, we’ll have conflicts between mine and yours How should property rights be allocated? Example of Coase: you have a car worth $3,000 to you, $4,000 to me Another example: you want to have a party in the house next door to mine The conditions for this to hold The Coase Theorem Coase’s example: a rancher and a farmer Rancher’s versus farmer’s rights Open range versus closed range Coase: either law will lead to efficiency Rancher and farmer: numerical example Other examples from Coase Quoting from Coase (p. 13): Quoting from Coase (p. 13): What does Coase mean by “a cost for both parties”? So, summing up… Some vocabulary about bargaining Some vocabulary about bargaining Some vocabulary about bargaining Let’s go back to the rancher and farmer Relating Coase to general equilibrium/first welfare theorem Relating Coase to general equilibrium/first welfare theorem Doesn’t Coase make Pierson v Post irrelevant? Transaction costs Quoting Coase… We can see the Coase Theorem as either a positive or negative result Many externalities can be thought of as missing property rights Harold Demsetz (1967), “Toward a Theory of Property Rights” Harold Demsetz (1967), “Toward a Theory of Property Rights” Harold Demsetz (1967), “Toward a Theory of Property Rights” Friedman tells a similar story: “we owe civilization to the dogs” Friedman tells a similar story: “we owe civilization to the dogs” Friedman tells a similar story: “we owe civilization to the dogs” So… This is easiest to illustrate with an example we’ve already seen: your car. Since the car’s worth more to me than it is to you, we know it’s efficient for me to have the car. (Assume there are no externalities – my neighbors don’t care.) But it turns out, in order to achieve that outcome, we don’t need a law that says I get your car – all we need is for people to be allowed to buy and sell used cars. Why? If I start off with the c