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A note on Coasean dynamics

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  • Alfred Entires
  • Bianca Rundshagen

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. Copyright Springer Japan 2008

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:p:57-66
    DOI: 10.1007/BF03353975
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    References listed on IDEAS

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    1. Endres, Alfred, 1977. "Nonseparability and the voluntary approach to externality problems," Journal of Environmental Economics and Management, Elsevier, vol. 4(3), pages 209-213, September.
    2. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    3. Adam Gifford Jr. & Courtenay C. Stone, 1973. "Externalities, Liability And The Coase Theorem:A Mathematical Analysis," Economic Inquiry, Western Economic Association International, vol. 11(3), pages 260-269, September.
    4. Rohan Pitchford, 2003. "Coming to the Nuisance: An Economic Analysis from an Incomplete Contracts Perspective," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(2), pages 491-516, October.
    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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    Cited by:

    1. Alfred Endres & Tim Friehe & Bianca Rundshagen, 2015. "“It’s All in the Mix!”- Internalizing externalities with R&D subsidies and environmental liability," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(1), pages 151-178, January.
    2. Alfred Endres & Tim Friehe, 2012. "Generalized Progress of Abatement Technology: Incentives Under Environmental Liability Law," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(1), pages 61-71, September.
    3. 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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    Keywords

    Coase theorem; Technical progress;

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