Coase minus the Coase Theorem : some problems with Chicago transaction cost analysis / Pierre Schlag.
In law as well as economics, the most well-known aspect of Coase’s “The Problem of Social Cost,” is the Coase Theorem. Over the decades, that particular notion has morphed into a crucial component of Chicago law and economics—namely, transaction cost analysis. In this Article, I deliberately bracket...
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Electronic version (Unrestricted access) |
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| Other title: | Coase minus the Coase theorem : some problems with Chicago transaction cost analysis (Online) Iowa law review. Colorado Law faculty scholarship collection. |
| Format: | Book |
| Language: | English |
| Published: |
Iowa City :
College of Law, State University of Iowa,
2013.
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| Series: | Iowa law review ;
v. 99, no. 1 (November 2013) |
| Subjects: |
| Summary: | In law as well as economics, the most well-known aspect of Coase’s “The Problem of Social Cost,” is the Coase Theorem. Over the decades, that particular notion has morphed into a crucial component of Chicago law and economics—namely, transaction cost analysis. In this Article, I deliberately bracket the Coase Theorem to show that “The Problem of Social Cost” contains far more interesting and unsettling lessons—both for law as well as for economics. Indeed, while Coase’s arguments clearly target the Pigouvian attempts to “improve on the market” through government correctives, there is, lurking in those arguments, a much more profound critique of neoclassical economics generally. This broader critique has been all but eclipsed by the focus on the Coase Theorem and its main offshoot—namely, Chicago transaction cost analysis. Here, based on a close reading of “The Problem of Social Cost,” I retrieve Coase’s broader critique from its current obscurity to show its relevance and bite for contemporary law and economics. In particular, I deploy Coase’s thought to show that Chicago transaction cost analysis is, on its own terms, compromised. Chicago transaction cost analysis has no theory capable of distinguishing transaction costs from production factor costs. It is accordingly incapable of delineating the circumstances when it is (or is not) efficiency-enhancing to “economize on transaction costs.” The surprising upshot is that despite its stated commitment to enhance efficiency, Chicago transaction cost analysis is instead engaged in a selective subsidization (or penalization) of various markets based on criteria that are at best opaque and quite possibly, incoherent. |
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| Item Description: | Article contained in the Vol. 99, no. 1 (November 2013) issue of Iowa law review. |
| Physical Description: | Article on p. 175-223. |
| Terms Governing Use and Reproduction Note: | Copyright protected. Use of materials from this collection beyond the exceptions provided for in the Fair Use and Educational Use clauses of the U.S. Copyright Law may violate federal law. Permission to publish or reproduce is required. |
| Preferred Citation of Described Materials Note: | Citation: Pierre Schlag, Coase Minus the Coase Theorem - Some Problems with Chicago Transaction Cost Analysis, 99 Iowa L. Rev. 175 (2013) |