Economic analysis of public law: to the Coase theorem and beyond

According to institutional economics, the State and public law are non-consensual institutions that intervene in horizontal relationships. Their beneficial value was initially considered self-evident by Pigou and Keynes. Ronald Coase and his theorem proved that this is not always the case. Coase theorem is crucial for public law. It shows that public intervention is necessary insofar as there are transaction costs and such intervention reduces them without creating additional inefficiencies. After Coase, economic analysis of public law has been the object of various academic streams. I classify them according to two criteria: positive v. normative analysis; narrow v. broad definition of social welfare. Chicago and Austrian Schools, together with the first Public Choice scholars, adopted a more hostile attitude towards the State. Other schools examine the modern administrative/regulatory State and constitutional or political institutions to support a less phobic approach and to improve rather than to reject public action.