The Coase Theorem and the Study of Law and Economics

Abstract

The purpose of this chapter is to provide a comprehensive assessment of the Coasian analysis, primarily through an interpretation of the positive analytic meaning and significance of the so-called neutrality theorem, the probative value of its nonnative message and its place in the study of law and economics. Among other things, the chapter will show that the theorem is a very limited partial-equilibrium proposition which concentrates upon certain variables to the exclusion of others which dominate the actual operation of those included, thereby giving effect to certain variables even while seemingly abstracting from them. Thus, when all the important variables are considered, the thrust of the theorem is shown to be not only incomplete, imprecise and ambiguous, but also reversed. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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