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Uncertain Property Rights and the Coase Theorem

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  • MAURICE SCHIFF

    (The World Bank)

Abstract

The Coase theorem states that, in the absence of transaction costs, the assignment of property rights does not affect resource allocation, and the allocation is Pareto optimal. The theorem also implies that the order in which parties settle in a given location does not affect resource allocation either. This article argues that Pareto optimality is not attained in a class of prevalent cases involving uncertain rights, risk aversion, and resource divisibility. Resolution of the uncertainty results in a Pareto improvement for all parties and in a different allocation of resources if wealth effects are significant. Further, the article argues that the order in which parties settle in a given location may affect resource allocation.

Suggested Citation

  • Maurice Schiff, 1995. "Uncertain Property Rights and the Coase Theorem," Rationality and Society, , vol. 7(3), pages 321-327, July.
    • Handle: RePEc:sae:ratsoc:v:7:y:1995:i:3:p:321-327
    DOI: 10.1177/1043463195007003005
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    Cited by:

    1. Matthew W. McCarter & Shirli Kopelman & Thomas A. Turk & Candace E. Ybarra, 2012. "Too Many Cooks Spoil the Broth: How the tragedy of the anticommons emerges in organizations," Working Papers 12-14, Chapman University, Economic Science Institute.
    2. Piacquadio Paolo G. & Di Bartolomeo Giovanni & Acocella Nicola, 2009. "A simple framework for investigating the properties of policy games," wp.comunite 0059, Department of Communication, University of Teramo.
    3. E. Guzzini & A. Palestrini, 2012. "Coase theorem and exchangeable rights in non-cooperative games," European Journal of Law and Economics, Springer, vol. 33(1), pages 83-100, February.
    4. Patrick Schmitz, 2001. "The Coase Theorem, Private Information, and the Benefits of Not Assigning Property Rights," European Journal of Law and Economics, Springer, vol. 11(1), pages 23-28, January.
    5. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.

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