The Coase Theorem and the Empty Core: Inspecting the Entrails after Four Decades

27 Pages Posted: 4 May 2022

See all articles by Jeffrey L. Callen

Jeffrey L. Callen

University of Toronto - Rotman School of Management

Varouj A. Aivazian

University of Toronto

Abstract

Ronald Coase pioneered the transaction cost approach to the modern analysis of institutions, contracts, and property rights. We argue that core theory enhances Coaseā€™s transaction cost approach by injecting considerations of coalition formation and stability into the analysis. Analysis of coalitional stability also provides additional insights regarding the nature of transaction costs and the efficiency of institutional arrangements when there are such costs. Overcoming the empty core is potentially an important function of contracts, institutions, and property rights.

Keywords: Coase Theorem, Institutional Arrangements, Empty Core, Transactions Costs

Suggested Citation

Callen, Jeffrey L. and Aivazian, Varouj A., The Coase Theorem and the Empty Core: Inspecting the Entrails after Four Decades. Available at SSRN: https://ssrn.com/abstract=4100426 or http://dx.doi.org/10.2139/ssrn.4100426

Jeffrey L. Callen (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-5641 (Phone)
416-971-3048 (Fax)

Varouj A. Aivazian

University of Toronto ( email )

Toronto, Ontario M5S 3G8
Canada

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