Document Type
Article
Publication Date
2008
Abstract
In "The Problem of Social Cost" Ronald Coase was highly critical of the work of Cambridge University Economics Professor Arthur Cecil Pigou, presenting him as a radical government interventionist. In later work Coase's critique of Pigou became even more strident. In fact, however, Pigou's Economics of Welfare created the basic model and many of the tools that Coase's later work employed. Much of what we today characterize as the "Coase Theorem," including the relevance of transaction costs, externalities, and bilateral monopoly, was either stated or anticipated in Pigou's work. Further, Coase's extreme faith in private bargaining led him to fail to see problems that Pigou saw quite clearly and that remain with us to this day.
Keywords
Coase Theorem, Pigou, Social Cost, Law and Economics, Economic History, Legal History, Marginalism
Publication Title
Arizona Law Review
Repository Citation
Hovenkamp, Herbert J., "The Coase Theorem and Arthur Cecil Pigou" (2008). All Faculty Scholarship. 1785.
https://scholarship.law.upenn.edu/faculty_scholarship/1785
Included in
Economic History Commons, Economic Theory Commons, Law and Economics Commons, Legal History Commons
Publication Citation
51 Ariz. L. Rev. 633 (2009)