Chapter 7: Coase on property rights
Ronald Coase changed how people view the world. Coase understood that his ideas were unique, writing that “most economists have a different way of looking at economic problems and do not share my conception of the nature of our subject” (Coase 1988: 1). With his unique perspective, he saw problems others did not see and analyzed them in ways that had a lasting effect on the field of economics. His scholarship also led to the birth of the new fields of law and economics and the new institutional economics and influenced the direction of property rights research. The Nobel Prize Committee mentioned Coase’s contribution to the understanding of property rights when it announced his Nobel Prize. Yet Coase wrote very little about the meaning of property rights and about the ways property rights should be structured. Mostly he assumed that property rights already existed or that courts would define property rights as the need arose. Coase had little interest in defining property rights; he cared about who owned the rights, how they were used, and how they were regulated. He was a practical scholar who tried to understand how the world really worked. Harold Demsetz has written that Coase “dealt with specific problems, not with economic systems; he was content to presume rational human action, and he was more concerned with the methods and institutions people employed to solve them than with the nature of mankind” (Demsetz 1998: 264).
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