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Coase Theorem: The Coase Theorem, proposed by economist Ronald Coase, asserts that in the absence of transaction costs, bargaining between parties will lead to an efficient allocation of resources regardless of the initial assignment of property rights, as long as property rights are well-defined and parties can negotiate freely. The Coase theorem explains for the first time why companies are formed.
Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

Author Concept Summary/Quotes Sources

Ronald Coase on Coase Theorem - Dictionary of Arguments

Mause I 416f
Coase theorem/intervention/environmental policy/externalities/CoaseVsPigou: Coase 1960 (3): in the case of (environment-related) external effects, there are no "polluters" or "victims" per se. Rather, a reciprocal character of external effects is to be assumed, i.e. if environmental impacts are allowed there are disadvantaged people, if these are prevented, there are also disadvantaged people. The reason for this is that environmental problems contain rival claims to use of environmental goods, which can basically be corrected in two possible directions (Hartwig 1992, p. 140 ff.(4); Feess und Seeliger 2013, p. 141 ff.(5)).
Example: An improvement of injured parties leads to costs on the part of the polluters.
Solution/Coase: Coase theorem: if there are no transaction costs, there is no need for government intervention to internalise external effects, as in this case the market leads to an optimal solution of the environmental problem in the form of private negotiations between the parties concerned. (See Transaction Costs/Coase).
Against: PigouVsCoase:
Interventions/environmental policy/Pigou: Although not originally developed on the basis of environmental problems, Pigou (1920) took the view early on that the market cannot be left to itself in the case of external effects. Rather - so the argumentation - sovereign interventions are required, that contribute to an internalisation of externalities according to polluters since only by means of such state interventions can private and social costs or benefits be covered with the aim of increasing the welfare of society as a whole. In order to prevent the misallocation of scarce (environmental) resources and thus a sub-optimal market supply of private goods, external costs or external income must be internalised by way of taxation (so-called Pigou taxes) or state subsidisation (Hansjürgens 1992, p. 28ff (1); Endres 2000, p. 94ff (2)).
Coase theorem: The Coase theorem thus contains both an efficiency and an invariance statement: In the event of non-existence of transaction costs, optimal (or more efficient) environmental protection is always achieved, regardless of how the rights to use the natural resources are distributed between the actors concerned in the initial situation.
VsCoase: In reality, however, such private negotiated solutions often involve specific problems that can lead to a failure of the pure market solution of environmental problems (Feess und Seeliger 2013, p. 147 ff.; Endres 2000, p.41ff.)
On the one hand, it must be taken into account that the distribution of usage rights in the initial situation does not impair the efficiency effect of the negotiation result, but rather its distributional effect.

1. Bernd Hansjürgens, Umweltabgaben im Steuersystem. Zu den Möglichkeiten einer Einfügung von Umweltabgaben in das Steuer- und Abgabensystem der Bundesrepublik Deutschland. Baden-Baden 1992..
2. Alfred Endress, Umweltökonomie, Stuttgart 2000.
3. Ronald Coase. 1960. The problem of social cost. Journal of Law and Economics 3: 1– 44.
4. Karl-Hans Hartwig, Umweltökonomie. In Vahlens Kompendium der Wirtschaftstheorie und Wirtschaftspolitik, Hrsg. Dieter Bender, Hartmut Berg, Dieter Cassel, Günter Gabisch, Karl-Hans Hartwig, Lothar Hübl, Dietmar Kath, Rolf Peffekoven, Jürgen Siebke, H. Jörg Thieme und Manfred Willms, Bd.   2, 5.   Aufl., 122– 162. München 1992.
5. Eberhard Feess, & Andreas Seeliger. 2013. Umweltökonomie und Umweltpolitik, 4.   Aufl. München 2013.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Coase, Ronald
Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018

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