Chapter 7: The Coase Theorem
The current law and economics movement really began with Ronald Coase’s 1960 article on social cost. During the first half of the 20th century, economics had succeeded in creating formal models capturing the intuition dating back to Adam Smith that markets, left to themselves, would generally lead to the best arrangements for maximising overall welfare. 1 In his widely respected treatise on welfare economics, the English economist Arthur Cecil Pigou challenged this conclusion. He showed that such a fortunate outcome would not be forthcoming in cases where a market could not be established for items that are nonetheless scarce. The specific case that interested him was that of external effects or externalities, also called neighbourhood effects or spillover effects.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.