Toward an Asymmetric Coase Theorem

Abstract:     
Various reformulations of the Coase theorem have developed normative corollaries on the choice of optimal remedies in the presence of positive transaction costs. In this article, we consider the extent to which these propositions are affected by the presence of asymmetric transaction costs, and we offer a reformulation of the Coase theorem which takes into account asymmetrical transaction costs. Our analysis combines several insights from the existing literature on property-type versus liability-type remedies, identifying the conditions for the superiority of each type of remedy. Further, we consider the possible use of mixed remedies and identify the optimal scope of such solution.

Number of Pages in PDF File: 16

Keywords: Coase Theorem, Property-Type Remedies, Liability-Type Remedies

JEL Classification: K10, K11, K19, D62, D70

working papers series