Environmental applications of the Coase theorem

Deryugina, Tatyana, Moore, Frances and Tol, Richard S J (2021) Environmental applications of the Coase theorem. Environmental Science and Policy, 120. pp. 81-88. ISSN 1462-9011

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The Coase Theorem has a central place in the theory of environmental economics and regulation. Its applicability for solving real-world externality problems remains debated. We first place this seminal contribution in its historical context. We then survey the experimental literature that has tested the importance of the many, often tacit assumptions in the Coase Theorem. We discuss a selection of applications of the Coase Theorem to actual environmental problems, distinguishing between situations in which the polluter or the pollutee pays. Most substantive examples of Coase-like bargaining involve more than two parties. It is not clear whether the outcomes of these bargains were Pareto optimal rather than merely Pareto improving. While limited in scope, Coasian bargaining over externalities offers a pragmatic solution to problems that are difficult to solve in any other way.

Item Type: Article
Additional Information: Arxiv version https://arxiv.org/abs/2004.04247
Schools and Departments: University of Sussex Business School > Economics
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 08 Mar 2021 09:25
Last Modified: 09 Apr 2021 15:22
URI: http://sro.sussex.ac.uk/id/eprint/97646
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