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The empty core in the Coase theorem: a critical assessment

Author

Listed:
  • Enrico Guzzini

    (Università Politecnica delle Marche, Italy)

  • Antonio Palestrini

    (University of Teramo, Italy)

Abstract

The purpose of this paper is to give some insights about the debate between Aivazian and Callen (1981, 2003) and Coase (1981) regarding the empty core problem. In particular our analysis concerns the role played by transaction costs in the debate. By maintaining the Aivazian-Callen transaction cost structure, we introduce in the analysis the new category “transaction costs in changing the state” which is linked to reputation and which may occur in situations of endless bargain. We argue, under our particular assumptions, that although Aivazian and Callen (2003) analysis is correct, Coase's intuition regarding the relationship between transaction costs and the empty core (Coase 1981) may be supported within Aivazian and Callen (2003) framework, if we introduce reputational concerns.

Suggested Citation

  • Enrico Guzzini & Antonio Palestrini, 2009. "The empty core in the Coase theorem: a critical assessment," Economics Bulletin, AccessEcon, vol. 29(4), pages 3095-3103.
    • Handle: RePEc:ebl:ecbull:eb-09-00379
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    References listed on IDEAS

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    1. Maija Halonen, 2002. "Reputation And The Allocation Of Ownership," Economic Journal, Royal Economic Society, vol. 112(481), pages 539-558, July.
    2. Varouj Aivazian & Jeffrey Callen, 2003. "The Core, Transaction Costs, and the Coase Theorem," Constitutional Political Economy, Springer, vol. 14(4), pages 287-299, December.
    3. Bernholz, Peter, 1997. "Property rights, contracts, cyclical social preferences and the Coase theorem: A synthesis," European Journal of Political Economy, Elsevier, vol. 13(3), pages 419-442, September.
    4. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    5. Aivazian, Varouj A & Callen, Jeffrey L, 1981. "The Coase Theorem and the Empty Core," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 175-181, April.
    6. Telser, Lester G, 1996. "Competition and the Core," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 85-107, February.
    7. Lester G. Telser, 1994. "The Usefulness of Core Theory in Economics," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 151-164, Spring.
    8. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753, January.
    9. Coase, R H, 1981. "The Coase Theorem and the Empty Core: A Comment," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 183-187, April.
    10. Bernholz, Peter, 1999. "The generalized Coase Theorem and separable individual preferences: an extension," European Journal of Political Economy, Elsevier, vol. 15(2), pages 331-335, June.
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    Cited by:

    1. Bin Ye & Jingjing Jiang & Lixin Miao & Ji Li & Yang Peng, 2015. "Innovative Carbon Allowance Allocation Policy for the Shenzhen Emission Trading Scheme in China," Sustainability, MDPI, vol. 8(1), pages 1-23, December.
    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. 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).

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    More about this item

    Keywords

    Coase theorem; empty core.;

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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