Making Coasean Property More Coasean
Abstract: In his pioneering work on transaction costs, Ronald Coase presupposed a picture of property – of property as a bundle of government-prescribed use rights – that is not only not essential to what Coase was trying to do, but its limitations emerge when we apply Coase’s central insights to analyze the structure of property itself. This leads to what we term the Coase Corollary: in a world of zero transaction costs the nature of property does not matter to allocative efficiency. But as with the Coase Theorem itself, the real point is the implication for a positive transaction cost world: where transaction costs – including information costs – are positive, simple lumpy packages of property rights form an important baseline that furnishes presumptive answers to bilateral use conflicts. The Coase Corollary points back to a picture of property more like the traditional one furnished by the law.
