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The Coase Theorem and Core Theory

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  • Aivazian Varouj A.

    (Department of Economics and Rotman School of Management, University of Toronto, TorontoON M5S, Canada)

  • Callen Jeffrey L.

    (Rotman School of Management, University of Toronto, TorontoON M5S, Canada)

Abstract

The writings of Ronald Coase, along with those of Armen Alchian and Harold Demsetz, on the theory of property rights, transaction cost economics, and the economics of institutions have yielded powerful insights and transformed many areas of economics. The seminal paper of Ronald Coase (Coase 1960, “The Problem of Social Cost,” Journal of Law and Economics, 3(1),1–44) not only clarified the notion of externality but also laid the foundations for a powerful theory of property rights and transaction cost economics. The insights of that paper have helped to shape the field of Law and Economics and also proved important in such fields as Environmental Economics, among others. It is worth mentioning that Coase’s work also led to our late colleague John Dales’ important book (Dales 1968, Pollution, Property, and Prices: An Essay in Policy-Making, University of Toronto Press) that formulated the idea of markets in pollution rights (cap-and-trade). In this note we will briefly review our work spanning many years linking the Coase Theorem to Cooperative Game Theory and Core Theory, emphasizing inter alia the importance of our approach for rationalizing property rights and contractual arrangements.

Suggested Citation

  • Aivazian Varouj A. & Callen Jeffrey L., 2017. "The Coase Theorem and Core Theory," Man and the Economy, De Gruyter, vol. 4(2), pages 1-5, December.
    • Handle: RePEc:bpj:maneco:v:4:y:2017:i:2:p:5:n:9
    DOI: 10.1515/me-2017-0014
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    References listed on IDEAS

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    1. Varouj A. Aivazian & Jeffrey L. Callen & Susan McCracken, 2009. "Experimental Tests of Core Theory and the Coase Theorem: Inefficiency and Cycling," Journal of Law and Economics, University of Chicago Press, vol. 52(4), pages 745-759, November.
    2. Richard A Posner & Francesco Parisi (ed.), 2013. "The Coase Theorem," Books, Edward Elgar Publishing, volume 0, number 14618.
    3. Varouj Aivazian & Jeffrey Callen, 2003. "The Core, Transaction Costs, and the Coase Theorem," Constitutional Political Economy, Springer, vol. 14(4), pages 287-299, December.
    4. Lester G. Telser, 1994. "The Usefulness of Core Theory in Economics," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 151-164, Spring.
    5. Aivazian, Varouj A & Callen, Jeffrey L & Lipnowski, Irwin, 1987. "The Coase Theorem and Coalitional Stability," Economica, London School of Economics and Political Science, vol. 54(216), pages 517-520, November.
    6. Coase, R H, 1981. "The Coase Theorem and the Empty Core: A Comment," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 183-187, April.
    7. Bernholz, Peter, 1997. "Property rights, contracts, cyclical social preferences and the Coase theorem: A synthesis," European Journal of Political Economy, Elsevier, vol. 13(3), pages 419-442, September.
    8. Aivazian, Varouj A & Callen, Jeffrey L, 1981. "The Coase Theorem and the Empty Core," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 175-181, April.
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    Cited by:

    1. Elodie Bertrand, 2019. "Much ado about nothing? The controversy over the validity of the Coase theorem," Post-Print hal-03479468, HAL.

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    Keywords

    coase theorem; core theory;

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