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Applications of the Coase Theorem

Author

Listed:
  • Tatyana Deryugina

    (Center for Business and Public Policy, College of Business, University of Illinois at Urbana-Champaign)

  • Frances C. Moore

    (Environmental Science and Policy, University of California Davis)

  • Richard S.J. Tol

    (Department of Economics, University of Sussex, Falmer, United Kingdom)

Abstract

The Coase Theorem has a central place in the theory of environmental economics and regulation. But its applicability for solving real-world externality problems remains debated. In this paper, we first place this seminal contribution in its historical context. We then survey the experimental literature that has tested the importance of the many, often tacit assumptions in the Coase Theorem in the laboratory. We discuss a selection of applications of the Coase Theorem to actual environmental problems, distinguishing between situations in which the polluter or the pollutee pays. While limited in scope, Coasian bargaining over externalities offers a pragmatic solution to problems that are difficult to solve in any other way.

Suggested Citation

  • Tatyana Deryugina & Frances C. Moore & Richard S.J. Tol, 2020. "Applications of the Coase Theorem," Working Paper Series 0820, Department of Economics, University of Sussex Business School.
    • Handle: RePEc:sus:susewp:0820
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    References listed on IDEAS

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    Cited by:

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    6. Bonev, Petyo & Matsumoto, Shigeru, 2022. "An empirical evaluation of environmental Alternative Dispute Resolution methods," Economics Working Paper Series 2208, University of St. Gallen, School of Economics and Political Science.
    7. Anna Komarova, 2022. "State Regulation of Energy Transition and Economic Development," Energies, MDPI, vol. 15(12), pages 1-13, June.

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    More about this item

    Keywords

    Coase Theorem; externalities; property rights; bargaining;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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