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A note on Coasean dynamics

Author

Listed:
  • Alfred Entires

    (University of Hagen
    University of Witten/Herdecke)

  • Bianca Rundshagen

    (University of Hagen)

Abstract

Under certain conditions, externalities may be internalized by voluntary agreements between the involved parties. According to the Coase theorem, the equilibrium allocation is independent from whether the property rights are assigned to the polluter or to the pollutee. In this article we extend the Coasean approach to a dynamic setting allowing for induced technical change. It is shown that, within the Coasean framework, not only equilibrium pollution abatement but also equilibrium investment into technical progress is Pareto optimal and independent from the distribution of property rights.

Suggested Citation

  • Alfred Entires & Bianca Rundshagen, 2008. "A note on Coasean dynamics," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 9(1), pages 57-66, March.
    • Handle: RePEc:spr:envpol:v:9:y:2008:i:1:d:10.1007_bf03353975
    DOI: 10.1007/BF03353975
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    References listed on IDEAS

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    5. Gifford, Adam, Jr & Stone, Courtenay C, 1975. "Externalities, Liability, Separability, and Resource Allocation: Comment," American Economic Review, American Economic Association, vol. 65(4), pages 724-727, September.
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    Keywords

    Coase theorem; Technical progress;

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