The Coase theorem is argued to be incompatible with bargaining set stability due to a tension between the grand coalition and sub-coalitions. We provide a counter-intuitive argument to demonstrate that the Coase theorem may be in complete consonance with bargaining set stability. We establish that an uncertainty concerning the formation of sub-coalitions will explain such compatibility: each agent fears that others may `gang up' against him and this fear forces the agents to negotiate. The grand coalition (...) emerges from the negotiations if each agent uses the principle of equal relative sacrifice to determine the actual allocation. We also establish the rational basis for the choice of the principle of equal relative concession by the negotiating agents. Hence we argue that the Coase theorem will be valid even if there are stable sub-coalitions. (shrink)

This essay explores the detailed argument of the Coase Theorem, as found in Ronald Coase’s “The Problem of Social Cost” and subsequently defended by Coase in The Firm, the Market, and the Law. Fascination with the Coase Theorem arises over its apparently unassailable counterintuitive conclusion that the imposition of legal liability has no effect on which of two competing uses of land prevails, and also over the general difficulty in tying down an unqualified statement (...) of the theorem. Instead of entering the debate over what exactly the theorem holds, this article suggests that the core of Coase’s reasoning is flawed and to the extent that any version of the theorem relies upon this reasoning it can be disproved. It is further suggested that a version of the theorem which avoided the need for Coase’s core argument by focusing on “the efficiency thesis” at the expense of “the invariance thesis” would be insufficiently significant to merit the status of a theorem; and that, in any event, Coase’s reasoning does not sustain an efficient outcome. The heart of the essay comprises the allegation of an error made by Coase when he transferred his core argument to the context of economic rents. The essay commences by considering and modelling the nature of the counter-intuitive thrust to the Coase Theorem, which is used to trace the development of Coase’s reasoning, and ultimately to expose the flaw it contains. Ancillary observations are made on the relationship between the Coasean analysis of characteristically legal problems and the conditions of general market equilibrium, and the theoretical status of law-and-economics. (shrink)

Errors in the history of economic analysis often remain uncorrected for long periods due to positive epistemic costs (PEC) involved in allocating time to going back over what older generations wrote. In order to demonstrate this in a case study, the economists’ practice of the “Coase Theorem” is reconsidered from a PEC point of view.

Kahneman, Knetsch, and Thaler's [. Experimental tests of the endowment effect and the Coase theorem. Journal of Political Economy, 98, 1325–1348] experiment on the Coase theorem disrupted a s...

In his classic paper on social costs, social scientist R. H. Coase has argued that in a world without transaction costs in the "buying and selling," of social benefits and damages, resource allocation would be unaffected by a change in the apportioning of liabilities. That is, whether or not a social nuisance-causer must pay damages to those to whom he is a nuisance, will not, in an efficient economy with no transaction costs, have any effect on resource allocation. In (...) this paper, the author intends to show that there is a certain class of nuisances that are not amenable to Coasean solutions even if one grants Coase 's intuitive notions of prudence and rationality, it is considered these situations only in the short term, and considerations of equity are ignored. This class of nuisances comprises certain of those instances in which the interests of a tenant are not identical with those of his landlord. The article also purposes to shed light on the merits of an "unearned increment" tax on the value of land. (shrink)

Growth of the private sector and privatization of state companies around the world have led to the emergence of various stock markets, some of which are depicted by insider trading. Law literature uses the arguments of unfairness, breach of fiduciary rights and damage to others to define and rule against insider trading. Economic literature can be used to interpret insider trading from other perspectives. This study argues that the question of insider trading in developing markets can be resolved by the (...) extent stock markets generate externalities and are public goods. It advocates structural changes in the developing markets and examines the conditions under which the Coase Theorem would work. (shrink)

Idealizations help us understand the world by simplifying it. When factors make discrete contributions to an outcome, leaving factors out can make it easier to identify the contributions of factors that remain. But typically in economics, factors are not discrete but interact; how can isolating some factor X from some factor Y help us understand a reality in which X’s contribution depends on what Y contributes? I argue that Ronald Coase’s method in ‘The Problem of Social Cost’ illustrates how (...) idealization can aid our understanding of a world in which factor Y (transaction costs) has an effect on factor X (transactions), by making plain precisely that effect, and so making it easier to see features of the actual world that obtain because of that effect. ‘Coasean’ idealization is therefore especially useful for understanding targets in which factors are not discrete but interact, as is so often the case in economics. (shrink)

This article examines Sagoff's criticisms of 'Four Dogmas of Environmental Economies' and argues that none of them are fatal. Many of the criticisms appear to rest on general misunderstandings about welfare economics. One misunderstanding is that transaction costs are theoretically indistinguishable from regular production costs. The theoretical distinction is that transaction costs vary under alternative policies and institutions whereas production costs are fixed by tastes, technology and endowments. Another misunderstanding is that market failure concerns only Pareto efficiency. Market failure also (...) concerns social efficiency with respect to the 'social welfare function', a device for making explicit ethical judgments about the interpersonal distribution of welfare. A third misunderstanding is that the 'rationality assumption' drives economic theory. In fact, the explanatory power of economic models comes mainly from explicit assumptions about the constraints facing economic agents. A fourth misunderstanding is that welfare economics is used as a mechanism for making legal and political decisions. Rather, welfare economics is used as a method for informing legal and political decisions by evaluating their outcomes on the basis of individual welfare. Used properly, it can improve the democratic process by bringing hidden costs and difficult issues to the attention of both policy-makers and the wider public. (shrink)

This book presents a theoretical treatment of externalities, public goods, and club goods. The new edition updates and expands the discussion of externalities and their implications, coverage of asymmetric information, underlying game-theoretic formulations, and intuitive and graphical presentations. Aimed at well-prepared undergraduates and graduate students making a serious foray into this branch of economics, the analysis should also interest professional economists wishing to survey recent advances in the field. No other single source for the range of materials explored is currently (...) available. Topics investigated include Nash equilibrium, Lindahl equilibria, club theory, preference-revelation mechanism, Pigouvian taxes, the commons, Coase Theorem, and static and repeated games. The authors use mathematical techniques only as much as necessary to pursue the economic argument. They develop key principles of public economics that are useful for subfields such as public choice, labor economics, economic growth, international economics, environmental and natural resource economics, and industrial organization. (shrink)

ArgumentThis article focuses on a problematic character of communication in science. Two solutions are compared: paradigm-based science and the semiotic solution developed in the arts and social sciences. There are several parallels between the latter approach and Marxist dialectics. A third, original, approach to solving communication problems is proposed; it can be labeled “transactional.” It represents a version of the semiotic solution with particular emphasis on interactions, both face-to-face and depersonalized, and the imperative of negotiating and finding compromises. Communication problems (...) existing at two registers of interactions, face-to-face and depersonalized, are differentiated; freedom is interpreted as the capacity to change the registers at will. An in-depth case study of the Coase theorem in economic sciences and legal studies illustrates key points in the proposed analysis. (shrink)

This chapter contains sections titled: What I s Regulation? How Should We Morally Evaluate Regulation? Welfarism; the Pareto Principle; Kaldor‐Hicks Efficiency versus Social Welfare Functions The Two Fundamental Theorems of Welfare Economics and the Market Failure Framework Externalities Public Goods and Monopoly Power The Coase Theorem Information and Paternalism as Rationales for Regulation Regulatory Forms and Regulatory Choice Criteria References.

Bioethics, Volume 36, Issue 4, Page 453-460, May 2022.

Ronald Coase has been a vigorous critic of mainstream economic theory, arguing that it is unrealistic and that a good theory is realistic. The attributes "realistic" and "unrealistic" appear in three senses at least in Coase: one related to narrow ness and breadth; another related to abstracting from particularities (and the issue of "blackboard economics"); and the third related to correspondence with the legal. This does not yet make Coase an advocate of realism. It is therefore separately (...) argued that each of the three kinds of "realisticness" as a property of theories is consistent with realism as a theory of theories. (shrink)

Ronald Coase is usually considered anything but a methodologist. Thus, it is not surprising that, in the introduction to "How Should Economists Choose?", which is the only paper Coase wrote on a methodological topic, he readily confessed his relative ignorance of philosophy of science, candidly observing that "Words like epistemology do not come tripping from my tongue" (HSEC, 6). However, given the importance of this Nobel Prize winner's contribution to the renewal of theoretical thinking in economics, everyone should (...) admit that his infrequent reflections on methodology, however crude they might look to methodologists, undoubtedly merit close consideration. Whatever methodological clarification these reflections might procure, it is surely worthwhile briefly to analyze them, with the hope of understanding a little better some dimensions of Ronald Coase's way of thinking and, more specifically, of emphasizing some implications of the close relationship between his methodological views and his radical conception of the market. With this in mind, I will first illustrate how far these methodological views seem, at first glance, to be dominated by a fundamental commitment to a straightforward realism; I will then show that they are instead subordinated, in a more complex way, to what I have just called Coase's radical conception of the market and, in conclusion, I will point out some questions raised by this situation. (shrink)

ABSTRACT Ken Hanly's recent article in this Journal (Vol. 9, No. 1, 1992) takes issue with Ronald Coase's approach to resolving problems of externalities, as set forth in his classic paper ‘The Problem of Social Cost’. I argue that Hanly's discussion of Coase misinterprets or inappropriately rejects certain aspects of Coase's analysis, specifically, with regard to the reciprocal nature of externalities and the economic role of government. The resolution of externality problems is presented as an issue of (...) selective normative choice as to whose interests are to count; neither efficiency nor morality claims are uniquely dispositive of the issue. (shrink)

ABSTRACT Coase's now famous paper, ‘The Problem of Social Cost’, argues that social harms caused by industry are best addressed through a policy which would be optimal in terms of market efficiency. I argue that this narrowly based policy represents a classic example of the failure of many welfare economists to consider adequately the ethical implications of their recommendations. I also indicate the manner in which Coase's recommendations conflict with intuitively well‐established ethical principles. I conclude that only an (...) approach that considers many more features than market efficiency can produce an optimal policy for dealing with the social costs of production. (shrink)

We analyze a model of conflict with endogenous choice of effort, where subsets of the contenders may force the resolution to be sequential: First the alliance fights it out with the rest and – in case they win – later they fight it out among themselves. For three-player games, we find that it will not be in the interest of any two of them to form an alliance. We obtain this result under two different scenarios: equidistant preferences with varying relative (...) strengths, and varying vicinity of preferences with equal distribution of power. We conclude that the commonly made assumption of super-additive coalitional worth is suspect. (shrink)

I compare deterministic and stochastic hidden variable models of the Bell experiment, exphasising philosophical distinctions between the various ways of combining conditionals and probabilities. I make four main claims. (1) Under natural assumptions, locality as it occurs in these models is equivalent to causal independence, as analysed (in the spirit of Lewis) in terms of probabilities and conditionals. (2) Stochastic models are indeed more general than deterministic ones. (3) For factorizable stochastic models, relativity's lack of superluminal causation does not favour (...) locality over completeness. (4) If we prohibit all superluminal causation, then the violation of the Bell inequality teaches us a lesson, besides quantum mechanics' familiar ones that quantities can lack precise values and that pairs of quantities can lack joint probabilities: namely, some pairs of events are not screened off by their common past. (shrink)

The Lévy-Solovay Theorem [8] limits the kind of large cardinal embeddings that can exist in a small forcing extension. Here I announce a generalization of this theorem to a broad new class of forcing notions. One consequence is that many of the forcing iterations most commonly found in the large cardinal literature create no new weakly compact cardinals, measurable cardinals, strong cardinals, Woodin cardinals, strongly compact cardinals, supercompact cardinals, almost huge cardinals, huge cardinals, and so on.

The class forcing theorem, which asserts that every class forcing notion ${\mathbb {P}}$ admits a forcing relation $\Vdash _{\mathbb {P}}$, that is, a relation satisfying the forcing relation recursion—it follows that statements true in the corresponding forcing extensions are forced and forced statements are true—is equivalent over Gödel–Bernays set theory $\text {GBC}$ to the principle of elementary transfinite recursion $\text {ETR}_{\text {Ord}}$ for class recursions of length $\text {Ord}$. It is also equivalent to the existence of truth predicates for (...) the infinitary languages $\mathcal {L}_{\text {Ord},\omega }$, allowing any class parameter A; to the existence of truth predicates for the language $\mathcal {L}_{\text {Ord},\text {Ord}}$ ; to the existence of $\text {Ord}$ -iterated truth predicates for first-order set theory $\mathcal {L}_{\omega,\omega }$ ; to the assertion that every separative class partial order ${\mathbb {P}}$ has a set-complete class Boolean completion; to a class-join separation principle; and to the principle of determinacy for clopen class games of rank at most $\text {Ord}+1$. Unlike set forcing, if every class forcing notion ${\mathbb {P}}$ has a forcing relation merely for atomic formulas, then every such ${\mathbb {P}}$ has a uniform forcing relation applicable simultaneously to all formulas. Our results situate the class forcing theorem in the rich hierarchy of theories between $\text {GBC}$ and Kelley–Morse set theory $\text {KM}$. (shrink)

Here is an account of logical consequence inspired by Bolzano and Tarski. Logical validity is a property of arguments. An argument is a pair of a set of interpreted sentences (the premises) and an interpreted sentence (the conclusion). Whether an argument is logically valid depends only on its logical form. The logical form of an argument is fixed by the syntax of its constituent sentences, the meanings of their logical constituents and the syntactic differences between their non-logical constituents, treated as (...) variables. A constituent of a sentence is logical just if it is formal in meaning, in the sense roughly that its application is invariant under permutations of individuals.1 Thus ‘=’ is a logical constant because no permutation maps two individuals to one or one to two; ‘∈’ is not a logical constant because some permutations interchange the null set and its singleton. Truth functions, the usual quantifiers and bound variables also count as logical constants. An argument is logically valid if and only if the conclusion is true under every assignment of semantic values to variables (including all non-logical expressions) under which all its premises are true. A sentence is logically true if and only if the argument with no premises of which it is the conclusion is logically valid, that is, if and only if the sentence is true under every assignment of semantic values to variables. An interpretation assigns values to all variables. (shrink)

Within the technical frame supplied by the algebraic variety of diagonalizable algebras, defined by R. Magari in [2], we prove the following: Let T be any first-order theory with a predicate Pr satisfying the canonical derivability conditions, including Löb's property. Then any formula in T built up from the propositional variables $q,p_{1},...,p_{n}$ , using logical connectives and the predicate Pr, has the same "fixed-points" relative to q (that is, formulas $\psi (p_{1},...,p_{n})$ for which for all $p_{1},...,p_{n}\vdash _{T}\phi (\psi (p_{1},...,p_{n}),p_{1},...,p_{n})\leftrightarrow \psi (...) (p_{1},...,p_{n})$ ) of a formula $\phi ^{\ast}$ of the same kind, obtained from φ in an effective way. Moreover, such $\phi ^{\ast}$ is provably equivalent to the formula obtained from φ substituting with $\phi ^{\ast}$ itself all the occurrences of q which are under Pr. In the particular case where q is always under Pr in φ, $\phi ^{\ast}$ is the unique (up to provable equivalence) "fixed-point" of φ. Since this result is proved only assuming Pr to be canonical, it can be deduced that Löb's property is, in a sense, equivalent to Gödel's diagonalization lemma. All the results are proved more generally in the intuitionistic case. (shrink)

Tennenbaum's Theorem yields an elegant characterisation of the standard model of arithmetic. Several authors have recently claimed that this result has important philosophical consequences: in particular, it offers us a way of responding to model-theoretic worries about how we manage to grasp the standard model. We disagree. If there ever was such a problem about how we come to grasp the standard model, then Tennenbaum's Theorem does not help. We show this by examining a parallel argument, from a (...) simpler model-theoretic result. (shrink)

In a recent article I compared the problem of theory choice, in which scientists must choose between competing theories, with the problem of social choice, in which society must choose between competing social alternatives. I argued that the formal machinery of social choice theory can be used to shed light on the problem of theory choice in science, an argument that has been criticized by Michael Morreau and Jacob Stegenga. This article replies to Morreau’s and Stegenga’s criticisms.

Given a normal (multi-)modal logic a characterization is given of the finitely presentable algebras A whose logics L A split the lattice of normal extensions of . This is a substantial generalization of Rautenberg [10] and [11] in which is assumed to be weakly transitive and A to be finite. We also obtain as a direct consequence a result by Blok [2] that for all cycle-free and finite A L A splits the lattice of normal extensions of K. Although we (...) firmly believe it to be true, we have not been able to prove that if a logic splits the lattice of extensions of then is the logic of an algebra finitely presentable over ; in this respect our result remains partial. (shrink)

Two thoughts about the concept of number are incompatible: that any zero or more things have a number, and that any zero or more things have a number only if they are the members of some one set. It is Russell's paradox that shows the thoughts incompatible: the sets that are not members of themselves cannot be the members of any one set. The thought that any things have a number is Frege's; the thought that things have a number only (...) if they are the members of a set may be Cantor's and is in any case a commonplace of the usual contemporary presentations of the set theory that originated with Cantor and has become ZFC.In recent years a number of authors have examined Frege's accounts of arithmetic with a view to extracting an interesting subtheory from Frege's formal system, whose inconsistency, as is well known, was demonstrated by Russell. These accounts are contained in Frege's formal treatise Grundgesetze der Arithmetik and his earlier exoteric book Die Grundlagen der Arithmetik. We may describe the two central results of the recent re-evaluation of his work in the following way: Let Frege arithmetic be the result of adjoining to full axiomatic second-order logic a suitable formalization of the statement that the Fs and the Gs have the same number if and only if the F sand the Gs are equinumerous. (shrink)

In recent years, there has been a surge in research addressing the question which properties predictive algorithms ought to satisfy in order to be considered fair. Three of the most widely discussed criteria of fairness are the criteria called equalized odds, predictive parity, and counterfactual fairness. In this paper, I will present a new impossibility result involving these three criteria of algorithmic fairness. In particular, I will argue that there are realistic circumstances under which any predictive algorithm that satisfies counterfactual (...) fairness will violate both other fairness criteria, that is, equalized odds and predictive parity. As will be shown, this impossibility result forces us to give up one of four intuitively plausible assumptions about algorithmic fairness. I will explain and motivate each of the four assumptions and discuss which of them can plausibly be given up in order to circumvent the impossibility. (shrink)