![]() ![]() Market and contractual institutions should also be considered, as well as corrective subsidies. ![]() Pigouvian taxation is revealed as not the only way to internalize an externality. Notwithstanding these restrictive assumptions, the equivalence version helps to underscore the Pigouvian fallacies that motivated Coase. Victim rights in contract law correspond to victim entitlements in extended markets and to the polluter pays principle in taxation. Equivalence also requires that each institution has equivalent property rights. It does not apply to pollution generally, since there are typically multiple victims. In each case the source of the externality is matched with a particular victim. Cattle trample a farmer's fields a building blocks sunlight to a neighbor's swimming pool a confectioner disturbs a dentist's patients etc. This applies to the cases that Coase investigated. First, spillover effects must be bilateral. To be logically correct, some restrictive assumptions are needed. Contracts, extended markets, and corrective taxation are equally capable of internalizing an externality. Cheung (1969) coined an extension of the Coase theorem: aside from transaction costs, all institutional forms are capable of achieving the same efficient allocation. In his UCLA dissertation and in subsequent work, Steven N. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |