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The Problem of Social Cost: What Problem? A Critique of the Reasoning of A.C. Pigou and R.H. Coase

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  • Demsetz Harold

    (University of California, Los Angeles)

Abstract

This essay discusses and refutes allegations by A.C. Pigou and R.H. Coase that a competitive, private-ownership economic system that conforms to the neoclassical model fails to allocate resources efficiently. The essay then suggests a source of inefficiency that differs from and is much more limited in application than are those offered by Pigou and Coase; and the suggested source, moreover, is compatible with the neoclassical model.

Suggested Citation

  • Demsetz Harold, 2011. "The Problem of Social Cost: What Problem? A Critique of the Reasoning of A.C. Pigou and R.H. Coase," Review of Law & Economics, De Gruyter, vol. 7(1), pages 1-13, February.
  • Handle: RePEc:bpj:rlecon:v:7:y:2011:i:1:n:1
    DOI: 10.2202/1555-5879.1502
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    References listed on IDEAS

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    1. Demsetz,Harold, 2012. "From Economic Man to Economic System," Cambridge Books, Cambridge University Press, number 9781107640856, August.
    2. F. H. Knight, 1924. "Some Fallacies in the Interpretation of Social Cost," The Quarterly Journal of Economics, Oxford University Press, vol. 38(4), pages 582-606.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Ronald Coase
      by ? in Tiempo Económico on 2013-09-05 15:12:00

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