Critique of Coase Theorem: Does it ignore fairness?
Some critics suggest the Coase Theorem, by focusing on efficiency and assuming low transaction costs, overlooks issues of fairness or equity. My focus was on demonstrating how, under certain conditions, an efficient outcome could be achieved. Whether that outcome is considered fair is a separate, though important, question that the theorem itself doesn't directly address. The theorem is about the *potential* for efficient bargaining; the fairness of the resulting distribution is a matter for policy and societal judgment.
Ask Ronald Coase the follow-up →