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The Coase Theorem and Coalitional Stability

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  • Aivazian, Varouj A
  • Callen, Jeffrey L
  • Lipnowski, Irwin

Abstract

It is the contention of this paper that the Coase theorem has yet to be formulated and proved in a rigorou s manner. The paper addresses the problem of strategic coalitional be havior when more than two agents are involved in the externality. It is shown that there are examples for which nonefficient allocations a re stable in the sense of Aumann-Maschler bargaining sets, thereby vi tiating the Coase theorem. Hence a proper formulation of the Coase th eorem must exclude bargaining-set stability. Copyright 1987 by The Review of Economic Studies Limited.

Suggested Citation

  • Aivazian, Varouj A & Callen, Jeffrey L & Lipnowski, Irwin, 1987. "The Coase Theorem and Coalitional Stability," Economica, London School of Economics and Political Science, vol. 54(216), pages 517-520, November.
    • Handle: RePEc:bla:econom:v:54:y:1987:i:216:p:517-20
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    Cited by:

    1. J. Peter Clinch & Eoin O'Neill, 2010. "Assessing the Relative Merits of Development Charges and Transferable Development Rights in an Uncertain World," Urban Studies, Urban Studies Journal Limited, vol. 47(4), pages 891-911, April.
    2. Stéphane Gonzalez & Alain Marciano, 2017. "De nouveaux éclairages sur le théorème de Coase et la vacuité du cœur," Revue d'économie politique, Dalloz, vol. 127(4), pages 579-600.
    3. John P. Conley & Stefani C. Smith, 2004. "Existence and Efficiency of a Price-Taking Equilibrium in an Economy with Public Goods, Externalities and Property Rights: A Coasian Approach," Vanderbilt University Department of Economics Working Papers 0403, Vanderbilt University Department of Economics, revised Jan 2004.
    4. Conley, John P. & Smith, Stefani C., 2005. "Coasian equilibrium," Journal of Mathematical Economics, Elsevier, vol. 41(6), pages 687-704, September.
    5. Luis Sanchez-Mier, 2005. "A Theory of Political Influence and Economic Organization," Department of Economics and Finance Working Papers EC200504, Universidad de Guanajuato, Department of Economics and Finance.
    6. Aivazian, Varouj A. & Callen, Jeffrey L., 2023. "The Coase Theorem and the empty core: Inspecting the entrails after four decades," International Review of Law and Economics, Elsevier, vol. 73(C).
    7. Scharpf, Fritz W., 1993. "Positive und negative Koordination in Verhandlungssystemen," MPIfG Discussion Paper 93/1, Max Planck Institute for the Study of Societies.
    8. Boyd, John III & Conley, John P., 1997. "Fundamental Nonconvexities in Arrovian Markets and a Coasian Solution to the Problem of Externalities," Journal of Economic Theory, Elsevier, vol. 72(2), pages 388-407, February.
    9. Aivazian Varouj A. & Callen Jeffrey L., 2017. "The Coase Theorem and Core Theory," Man and the Economy, De Gruyter, vol. 4(2), pages 1-5, December.
    10. Paul Weirich, 2011. "Exclusion from the social contract," Politics, Philosophy & Economics, , vol. 10(2), pages 148-169, May.
    11. Varouj A. Aivazian & Jeffrey L. Callen & Susan McCracken, 2009. "Experimental Tests of Core Theory and the Coase Theorem: Inefficiency and Cycling," Journal of Law and Economics, University of Chicago Press, vol. 52(4), pages 745-759, November.
    12. Caparrós, By Alejandro & Pereau, Jean-Christophe, 2021. "Inefficient coasean negotiations over emissions and transfers," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 359-378.
    13. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    14. Sanjay Patnaik, 2020. "Emissions permit allocation and strategic firm behavior: Evidence from the oil sector in the European Union emissions trading scheme," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 976-995, March.
    15. Partha Gangopadhyay, 2000. "On the coase theorem and coalitional stability: the principle of equal relative concession," Theory and Decision, Springer, vol. 48(2), pages 179-191, March.
    16. Zhanna A. Mingaleva & Yurii V. Starkov, 2020. "The System of Emission Taxation Analyzed: An Institutional Approach," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 2, pages 25-38, April.
    17. Fritz W. Scharpf, 1994. "Games Real Actors Could Play," Journal of Theoretical Politics, , vol. 6(1), pages 27-53, January.

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