Calculation and Equilibrium Problems in the Coase Theorem

Abstract

To analyze the feasibility of applying the Coase Theorem, this article uses two traditional arguments, economic calculation and non-neutral effects, found in the Austrian literature. This article argues that the efficiency calculation a judge undertakes is problematic and that his decision should not be considered neutral with respect to the general equilibrium (even with zero transaction costs). These problems imply serious challenges to the application of the Coase Theorem.

Keywords: Coase Theorem, calculation problem, transaction costs

JEL Classification: D28, P48, Q58