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Coase, Rents, And Opportunity Costs, Stewart J. Schwab
Coase, Rents, And Opportunity Costs, Stewart J. Schwab
Cornell Law Faculty Publications
Professor Posin is to be congratulated on his recent article in this Review, "The Coase Theorem: If Pigs Could Fly," for creating a precise example that purports to disprove the Coase Theorem. Legal scholarship should strive more towards verifiable or falsifiable statements about the law. Of course, falsifiable statements are a risky strategy, and in this case the risk has materialized. Posin's claim—that his example shows a flaw in the Coase Theorem—is false.
Posin's claim is an especially bold one, for his example deals with a shifting legal entitlement between two producers. Most successful attacks on the Coase Theorem have …