Economics Dictionary of ArgumentsHome
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| Law: Law is a set of rules that are created and are enforceable by social or governmental institutions to regulate behavior. Law helps to maintain and protect people's rights. See also Rights, Society, State, Jurisdiction._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Ronald Coase on Law - Dictionary of Arguments
Kiesling I 23 Law/Coase /Kiesling: Example: In order for the farmers to bargain with the railroad over the rights to emit sparks and the rights to unharmed crops enough farmers would have to gather together to represent the interests of all affected farmers - in other words, the transaction costs would be high. >Social cost/Coase, >Transaction cost/Coase, >Transaction cost/Pigou, >Property rights/Coase. In situations like these, the courts determine which party has legal liability for harms created, and enforce compensation if necessary. Pervasiveness: An overarching theme of Coase’s work on social cost is that transaction costs are pervasive. Because of that pervasiveness courts are important institutions whose decisions have implications for both the efficiency of outcomes and the distribution of profits across parties. Law/Coase: The law is an institution that can act to clarify property rights, as Coase notes in his Nobel address:“ If we move from a regime of zero transaction costs to one of positive transaction costs, what becomes immediately clear is the crucial importance of the legal system in this new world. I explained in “The Problem of Social Cost”(1) that what are traded on the market are not, as is often supposed by economists, physical entities, but the rights to perform certain actions, and the rights which individuals possess are established by the legal system. Kiesling I 24 While we can imagine in the hypothetical world of zero transaction costs that the parties to an exchange would negotiate to change any provision of the law which prevents them from taking whatever steps are required to increase the value of production, in the real world of positive transaction costs, such a procedure would be extremely costly and would make unprofitable, even where it was allowed, a great deal of such contracting around the law“. (1992)(2) >Information/Coase, >Law and economics. 1. Coase, Ronald H. (1960). The Problem of Social Cost. Journal of Law and Economics 3: 1-44. 2. Ronald H. Coase – Prize Lecture. NobelPrize.org. Nobel Prize Outreach 2025. Wed. 16 Apr 2025. |
Coase, Ronald Kiesling I L. Lynne Kiesling The Essential Ronald Coase Vancouver: Fraser Institute. 2021 |
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