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The author or concept searched is found in the following 3 entries.
| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Coase Theorem | Coase | 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. |
Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018 |
| Coase Theorem | Miceli | Parisi I 19 Coase theorem/Miceli: Coase’s original motivation in writing his seminal paper on externalities(1) was to offer a critique of the Pigovian view, which asserted that some form of government intervention (taxes, fines, or liability) was required to internalize external harm, such as that caused by straying cattle or railroad sparks. Causation/Pigou: Absent such intervention, the Pigovian view maintained, the “cause” of the harm (the rancher or the railroad) would over-engage in the harmful activity. CoaseVsPigou: Coase challenged this view by first noting that causation is reciprocal in the sense that both the injurer and victim must be present for an accident to occur. The designation of one party as the “injurer” is therefore arbitrary and in fact represents an implicit awarding of the right to be free from harm to the other party (the “victim”). Pigovian view: (...) the farmer has the right to be free from crop damage - whether from straying cattle or spewing sparks - and so the rancher or the railroad should be compelled to pay the farmer’s cost. Problem: (...) suppose the farmer-victim is in a better position to avoid the harm, say by moving his crops or not locating near the railroad or ranch in the first place. In that case, the designation of the rancher/railroad as the injurer may actually preclude the identification of more efficient ways of avoiding the harm. Coase’s point in raising the causation issue was to evaluate the conditions under which court-imposed liability is needed to internalize the external harm. Suppose, for example, that in the rancher–farmer dispute the court does not intervene to assign liability to the rancher. Does that necessarily mean that the rancher’s herd will expand inefficiently? Marginal benefit/marginal cost: The answer, of course, is no, provided that the parties can bargain, because if bargaining is possible, the farmer would be able to bribe the rancher to reduce the herd to the point where the marginal benefit from the last cow equals the marginal cost. In this case, property rights in straying cattle effectively belong to the rancher, and the farmer has to “purchase” them, which he will do up to the point where the two parties value the last cow equally. VsPigovian view: Note that this is the reverse of what happens under the Pigovian solution, where the farmer is (implicitly) awarded rights to the straying cattle and the rancher has to purchase them by paying the court-imposed damages. Efficiency: In both cases, however, the outcome will be efficient. Coase: This conclusion - that the initial assignment of property rights does not affect the final distribution of resources, which is efficient - is the Coase Theorem. External costs: [Key point]: When the conditions for the Coase Theorem are satisfied - that is, when bargaining is possible - the assignment of liability for external harms does not affect efficiency because the parties will rearrange any initial assignment of rights to the point where the gains from trade are exhausted. In this sense, the law does not matter for efficiency (though it does affect the distribution of wealth).* Law: When bargaining is not possible, in contrast, the law does matter because the parties will not be able to rearrange inefficient assignments of rights. As a result, the law must be designed with the explicit goal of efficiency in mind. In this way, the Coase Theorem defines the efficient scope for legal intervention (Demsetz, 1972)(2). >Liability/Calabresi/Melamed. * The conclusion that the efficient allocation of resources will be achieved regardless of the initial assignment of legal rights mirrors the First Fundamental Theorem of Welfare Economics, which says that market exchange will be efficient regardless of how property rights are initially assigned. The >Coase Theorem thus shows that externalities need not preclude this outcome as long as bargaining costs are low. Cf. >Liability/Calabresi/Melamed. 1. Coase, Ronald (1960). “The Problem of Social Cost.” Journal of Law and Economics 3: 1–44. 2. Demsetz, Harold (1972). “When Does the Rule of Liability Matter?” Journal of Legal Studies 1: 13 - 28. Miceli, Thomas J. „Economic Models of Law“. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press. |
Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
| Interventionism | Pigou | Mause I 415f 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)). Intervention/Externalities/CoaseVsPigou: Coase 1960 (3): in the case of (environmental) 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). 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, Vol. 2, 5.ed., 122– 162. München 1992. 5. Ebernhard Feess, & Andreas Seeliger. 2013. Umweltökonomie und Umweltpolitik, 4.ed. München 2013. |
EconPigou I Arthur C. Pigou The Economics of welfare London 1920 Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018 |
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