Lecture 3 - Property Rights - 2.pdf - ECONOMIC ANALYSIS OF...

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Theorems Related Tothe Theorem of CoaseECONOMIC ANALYSIS OF LAWLecture 3 - Economic Theory of PropertySegment 1The Theorems Related to the Theorem ofCoase
Property rightsRecognized in land, personal property, intellectual propertyNot recognized in people (slaves), body parts, human embryospp. 161 - 163What about DNA?, sperm, eggs?Segment 1The Theorems Related to the Theorem ofCoase
Coase TheoremThe more formal statement of the Theorem of Coase waspresented by Professor Cooter:When transaction costs are zero (0), an efficient (sociallyoptimal) use of resources results from private bargaining,regardless of the legal assignment of property rights.Cooter& Ulen (6thed.)p. 85Segment 1The Theorems Related to the Theorem ofCoase
Electric Co. and LaundryBargainCoase TheoremVery Low or 0Transaction CostsSegment 1The Theorems Related to the Theorem ofCoase
Converse to Coase TheoremThe converse of the Theorem of Coase is also presented byProfessor Cooter:When transaction costs are high enough to preventbargaining, the efficient use of resources will depend on howproperty rights are assigned.Cooter& Ulen (6thed.)p. 85Segment 1The Theorems Related to the Theorem ofCoase
Converse to Coase TheoremTransaction costs represent a direct reductionof social surplus regardless of which partypays themAn inefficient technology (railroad sparkarrestors, fences) may be more Pareto optimalif transaction costs are high enoughSegment 1The Theorems Related to the Theorem ofCoase
Electric Co. and LaundryBargainCoase TheoremNo BargainVery Low or 0Transaction CostsVery High orInsurmountableTransaction CostsCannot RemoveTransaction CostsSegment 1The Theorems Related to the Theorem ofCoase
NormativeCoase TheoremStructure the law so as to remove the obstacles to privateagreements.Cooter& Ulen (6thed.)pp. 92-93Segment 1The Theorems Related to the Theorem ofCoase
BargainCoase TheoremNo BargainNormative Coase TheoremVery Low or 0Transaction CostsVery High orInsurmountableTransaction CostsRemoveTransaction CostsElectric Co. and LaundrySegment 1The Theorems Related to the Theorem ofCoase
Normative Hobbes TheoremStructure the law so as to minimize the harm caused byfailures in private agreements.Cooter& Ulen (6thed.)p. 92Segment 1The Theorems Related to the Theorem ofCoase
ECONOMIC ANALYSIS OF LAWLecture 3 - Economic Theory of PropertySegment 2Theorem of CoaseVariant Version
Segment 2Theorem of CoaseVariant Version
Demand for GrainSupply of GrainGrainDemand for BeefSupply of BeefBeefVariant Version of the Theorem of CoaseRedistribution of Surplus from consumers of beef toconsumers of grain causes:demand for grain to increasedemand for beef to decreaseSegment 2Theorem of CoaseVariant Version
ECONOMIC ANALYSIS OF LAWLecture 3 - Economic Theory of PropertySegment 3Injunctions and Compensation Revisited

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