Talk:Coase theorem

message: Changes made to page: Mads10580522 (talk) 05:39, 1 November 2020 (UTC)

message: Changing the lede. If you want to talk about it here, let me know. It seems like it's been a decade or so since this page has been worked on so I'm assuming there will not be too many protests. Rest assured that I have professional qualifications to make these kinds of edits.--MoralMoney (talk) 00:49, 16 July 2023 (UTC)
thread_title: Fixing the lede

message: And I'm going to rewrite it. Anyone else want to join? Ogo (talk) 03:23, 31 January 2012 (UTC)
thread_title: This page is pretty crappy

message: The criticism section currently says that the Coase theorem is often criticized on basis that transaction costs are seldom negligible. The editorial challenge here is that, well, yes - it is very true transaction costs are often high as Coase himself reminds us in his 1960 paper (start of section V ), and this article should definitely make this point prominently since the popular understanding of the Coase theorem (as even promulgated by some MBA programs that shall go unnamed) completely misses this very very key point. Yet this isn't a criticism, per se - because the 'theorem' (as described by Coase in a 1997 interview anyhow ) is just a statement about those situations in which transaction costs happen to be negligible, and (afaik) nobody denies that such situations do sometimes exist. So we should keep this point, even emphasize it - yet not characterize it as a criticism. How best to do that... thoughts? Bmord (talk) 04:54, 13 January 2008 (UTC)
thread_title: Editorial ideas needed: True point is falsely characterized as criticism but in fact is an important clarification, how should we present?

message: The hypothetical provided under "Application in United States Contract and Tort Law" is, at best, poorly explained.  Since the Coase "theorem" states that (assuming the absence of transaction costs) any initial rights allocation will lead to the same outcome, it would seem to make sense to organize the hypothetical along these lines:
# Cost of Wall = $50, Property Damage = $100
## initial rights allocation 1: no right to recover
## initial rights allocation 2: right to recovery
# Cost of Wall = $100, Property Damage = $50
## initial rights allocation 1: no right to recover
## initial rights allocation 2: right to recovery
And thus, to demonstrate from a simple hypothetical that the outcomes in A1 and A2 will be the same, and likewise, outcomes in B1 and B2 will be the same.
In addition, I think the author of the hypo got it wrong.  He said:
# If a cause of action exists (i.e. #2 could sue #1 for damages and win) and the property damage equals $100 while the cost of building a wall to stop the run-off equals $50, the wall will exist. Owner #2 will either go to court to get the wall built or pay Owner #1 some amount between $51 and $99 to build the wall without court intervention.
I think it's obvious to any lay person that Owner 2 won't pay Owner 1 to build the wall if Owner 2's property rights allow him to recover the damage to his property.  In general this is a poorly-worded hypothetical.  I suggest replacing it with the following (this is just a brief sketch):
# Assume the run-off damage to Owner 2's property amounts to $100 and the cost of building a wall to stop the run-off is $50
## If a cause of action exists (i.e. it is clear that Owner 2 could sue Owner 1 for damages and win), Owner 1 will voluntarily choose to build the wall and save himself $50.
## If a cause of action does not exist, Owner 2 will have a strong incentive to pay any amount less than $100 to Owner 1 in order that Owner 1 prevent the run-off. (Assume that Owner 2 cannot simply build the same wall on his property to prevent the run-off).  Owner 1 will gladly accept any amount over $50 (the cost of building the wall) from Owner 2.  So Owner 2 is likely to pay Owner 1 some amount between $51 and $99 to have Owner 1 build the wall.  Thus, the wall will again be built.
# Now assume the run-off damage to Owner 2's property amounts to $50 and the cost of building a wall to stop the run-off costs $100
## If a cause of action exists, Owner 1 will not build the wall, since it costs more than merely compensating Owner 2 for the property damage.
## If a cause of action does not exist, Owner 1 will only build the wall if Owner 2 is willing to pay him more than $100, which Owner 2 not be willing to do (since he can repair damage to his property a cost of only $50).  Thus the wall will again not be built.
==== Dark irony ====
The common case of downhill damage isn't from run-off, it's from dams breaking. The Johnstown flood makes a great example. The cost most years was zero... until it was infinite.  — Preceding unsigned comment added by 67.100.123.107 (talk) 15:54, 29 March 2017 (UTC)
thread_title: Poorly Constructed/Explained Example

message: The common case of downhill damage isn't from run-off, it's from dams breaking. The Johnstown flood makes a great example. The cost most years was zero... until it was infinite.  — Preceding unsigned comment added by 67.100.123.107 (talk) 15:54, 29 March 2017 (UTC)
thread_title:  Dark irony 

message: I removed "(although no definite mathematical version of it has ever been stated or proved)" because that's mistaken.  I added a link to a proof of a version just as a nice example on the web, but this is hardly the only example.  Jimbo Wales 23:58, 21 Nov 2004 (UTC)
thread_title: Earlier comments

message: I corrected the mention of Coase winning a Nobel prize to the Bank of Sweden Prize in Economic Sciences. There is no such thing as a "Nobel prize in Economics". While the Bank of Sweden prize is awarded "in memory of Alfred Nobel", it is entirely unconnected with the Nobel Foundation, and the use of Nobel's name has been opposed by the foundation since the creation of the Bank of Sweden prize. Corvus 18:11, 27 Feb 2005 (UTC)
thread_title: Nobel prize

message: I created some images. You can find them in the german version of this text. You may want to translate them. Stern 01:04, 3 Mar 2005 (UTC)
thread_title: Images

message: the broad conclusion of the coase theorem is that free market actors are more efficient than central planners (this is why it is controversial at third rate schools that claim to teach "economics" but in reality are just shills for modern day centralists and despots [eg. paul krugman])
judging from the poor explanation in this article and the focus on criticism i assume the author(s) learned about the theorem at a third or second rate econ school
:This is exactly the kind of response I have come to expect from free market true believers. No attempt to rebut the criticisms of Coase's Theorem, simply an ad hominem attack on the writer(s). Please refrain from making incivil comments such as this on Wikipedia. Rather than attacking the author, attack the ideas they present - if you can.—greenrd (talk) 16:15, 27 July 2008 (UTC)
thread_title:  sigh 

message: In my opinion the introduction is missing to mention that the existence (and effective enforcement) of property rights is a second necessary condition besides "no relevant transaction costs" for the Coase theorem to hold. In many cases the problem isn't principally (or only) the level of transaction costs, but the missing transparence concerning the rights of those involved. I don't want to include that myself since I'm neither a native speaker nor a real expert. de:Waifar 84.178.90.252 14:16, 29 September 2007 (UTC)
replies: text: It could be argued that the security of property rights is implied by "trade ... is possible".  —Tamfang 18:54, 6 October 2007 (UTC)
thread_title:  Property Rights 

message: I have restored the items that were removed from the External Links section because I didn't see any rationale provided for removing them.  I have made no attempt to determine the suitability of the links, and have no opinion on the subject.  I've started this section so the matter can be discussed.--Tedd (talk) 17:43, 2 November 2008 (UTC)
thread_title:  External Links 

message: The Coase theorem is susceptible to the prosaic response that "money isn't everything." If there are utilities such as personal safety and enjoyment, that I cannot afford to protect, the result of negotiation will not be optimal for me. If I am poor, I might find myself unable to protect almost all of my utilities.
In general, economic theories are susceptible to the fallacy of equating what I want with what I demand. What I demand is no more than what I can afford, and if you measure the quality of an outcome by what the participants demand, you have a completely circular argument, for what they demand is limited by their resources. In order to measure an economic theory, you have to take into account all of the utilities that people have in mind, and see how well they are served by an outcome. --75.155.234.228 (talk) 16:04, 12 May 2013 (UTC)
thread_title:  Remark 

message: The tort hypothetical needs one adjustment, I think. Scenario Three reads:
"If a cause of action does not exist, and the damage equals $100 while the cost of the wall equals $50, the wall will exist. Even though #2 cannot win the lawsuit, he or she will still pay #1 some amount between $51 and $99 to build the wall."
This doesn't seem correct. If a cause of action does not exist, #2 cannot shift the $100 cost onto #1, so #2 is faced with two options: incur the $100 damage or pay a lower amount to avoid that damage (by constructing a wall or having a wall constructed). The utility-maximizing choice would be to pay $50 to build the wall herself. She wouldn't pay more than that to have #1 build the wall.  — Preceding unsigned comment added by 71.235.98.142 (talk) 17:24, 5 September 2013 (UTC)
thread_title:  Tort Hypothetical 

message: Can some of this info be added to the Transaction cost economics article, with possible a quick reference to this article? I might not be enough of an expert to rewrite this over into the article but I can make an effort at it if I get the chance. Shaded0 (talk) 01:17, 19 December 2016 (UTC)
thread_title:  Adding info to [[Transaction cost]] 

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thread_title:  External links modified 

message: Ronald Coase got Nobel Prize and during his speech, he characterized his theory as case by case, meaning he is not an ideologue.
Coase Theorem has been cited and applied on many economic researches and According to a recent research, Thanks to Coase Theorem, Cap-and-trade system significantly helped to reduce emissions much more superior than command and control regulations. I've always felt that wiki guys are students leftwing who worship Krugman, Delong and Stiglitz so they inappropriately overcite them on every issues while bashing Pro-market things citing by low-quality, not so reliable, third class sources. Too Shame. https://www.nber.org/papers/w26687 Shfur0306 (talk) 02:05, 28 January 2020 (UTC)
thread_title:  Extreme biases based on Wiki's leftwing anti-market ideology