HoPE notes: June 11 I

Market Failure, Medema [ASK ABOUT HIS SLIDES]
The Economics of Welfare, (1920), Pigou
* Divergence between private and social net products.
* This makes a prima facie case for state action. But, he's cognizant of limits to government's abilities, but saw committees of 'experts' as a solution. [see "State Action and Laissez-Faire" (1935)]
After Pigou, there's about three decades of silence around externalities. In the 1940-50s, there is a rebirth. [see Medema's piece "exceptional and unimportant?"]. Bruce notes that with the great depression and world war, economists had other things to worry about, although they wrote a lot about other things anyway, so this can only be part of the explanation.
Then, we get a larger focus on the optimality of a competitive system with: Pareto, Barone, Lerner, Lange, Hotelling, Allais, Arrow 1951, Debrue. 
Assumption of FTWE and STWE: 
Collective Consumption: Musgrave 1939. Literature on public good started with him. Note: he equates indivisibility with non-excludability [which I asked and Steve notes that we don't think about it like that today]
literature is a muddle [see Medema 2020]. Vast variety where one persons' actions has measurable spillovers on others. 
Collective Consumption, (1954), Samuelson; "The Pure Theory of Public Goods" (1954). Provides basically the form of public goods that we still have today. Also "A Diagrammatic Esposition of ..." (1955), because ppl couldn't understand the math in the 1954 paper. Incentive to provide "false signals" = free riding. Modern public goods combine the non-excludability of Musgrave and non-rivalry of Samuelson. Musgrave, (1959) coins the non-rivalry term. 
[survey book: Cornes & Sandler, the theory of public good, club goods, and externalities; most recent edition around 1999, https://www.cambridge.org/core/books/theory-of-externalities-public-goods-and-club-goods/7E207CA8467BA6EF08361F4B5D5D7513].
Meade's (1952), first mathematical expression of the externalities problem. Bees and apples. No mention of how it could ge solved, e.g. with a tax like Pigou suggested. 
Bator (1958) finally teases out the differences between different types of market failures: public goods, externalities.
* Ownership externalities; no ownership right, e.g. the atmosphere is overpolluted because nobody bears the cost directly
* Techinical externalities: Increasign returns to scale
* Public good externalities
On the side, people started to become concerned about natural resource problems. Starting to work on environmental issues, starting to see them as externalities. Also starts to expand the purview of economics to topics that aren't historically econ. [Steve complains about the term economic imperialism, since you can't take over journals etc by force, he says economists were invited in].
[Tullock should've won a Nobel, shared with Buchanan, according to Medema, but pissed too many ppl off.] One of the three people to develop the theory of rent seeking, together with Anne Kreuger, and someone else. Area of public choice, Buchanan was kind of a leader, while Tullock pushed the frontier? Out of this work comes the origin of public choice. Calculus of Consent (1962)
Steve tells story of how after the FCC paper that Coase had in the journal of law and economics, how Coase visited Chicago and convinced the Chicago faculty he was right at Aaron Director's house. Director asks him to write up the argument more generally, upon which Coase writes 'the problem of social cost' (1960), which though doesn't contain the Coase theorem, it is an attack on Pigou's work. In the conclusion, there is the statement on p.14 which comes close to the statement of the Coase thm [see Steve's slides for the quote]. Stigler in 1966 "The Theory of Price" coins the Coase theorem. The Coase theorem first appears in Stigler's textbook, in the 1966 edition. For Stigler, the Coase theorem expands the FTWE to encompass externalities too! [NPR interview with Coase, on book on China]. Essentially lays out a methodological approach, arguing for a type of cost-benefit analysis of government intervention. He defends the logic of the theorem, but rejects its practical use. [What sort of empirical work is there to test how the assignment of property right affects if a pareto optimal outcome is achieved?]
Some mathematical disproves go back to the 70s, disagreement about the meaning of transaction costs.
[three categories of market failure, missing markets, information, and smth else, where is this from again? Stiglitz?]