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The Value/Fact Distinction: Coase's Theorem Unifies Normative and Positive Economics

Frank J. Tipler
Tulane University


January 15, 2007


Abstract:     
I show that in a true Coasean world - a world with no transaction costs - there would be no disagreement on moral questions. There would be no disagreement on what the appropriate distribution of income should be. There would be no disagreement on the question of capital punishment or abortion. If the government tried to re-distribute income contrary to the no-transaction cost ideal, then in a Coasean world, the beneficiaries would return the money to those from whom it was taken by taxation. Empirical studies of a near-Coasean economy show this predicted return occurring. Thus disagreements on values are actually disagreements over facts. I shall argue that the Coase Theorem itself suggests a moral rule: act to minimize transaction costs.

Keywords: Coase Theorem, nomative economics, positive economics, social norms, information cost, transaction cost, income distribution, value/fact distinction

JEL Classifications: A1, A12, A13, D31, K00, K23, K32, L82

Working Paper Series

Date posted: January 29, 2007 ; Last revised: January 29, 2007

Suggested Citation

Tipler, Frank J., The Value/Fact Distinction: Coase's Theorem Unifies Normative and Positive Economics (January 15, 2007). Available at SSRN: http://ssrn.com/abstract=959855


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Frank J. Tipler (Contact Author)
Tulane University ( email )
New Orleans, LA 70118
United States
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