Law Commons^™

Coase's Twin Towers: The Relation Between The Nature Of The Firm And The Problem Of Social Cost, Stewart J. Schwab

Cornell Law Faculty Publications

Ronald Coase's The Nature of the Firm (The Firm) may well be the second most cited article in law and economics. Usually, calling something second best is a backhanded compliment. But in this case the praise is sincere, for Coase also wrote the most cited article, The Problem of Social Cost (Social Cost). Much ink has been spilled over each article. Both are justly famous, and together they make Coase a richly deserving recipient of the Nobel Prize in Economics.

The Firm, published in 1937, is most often studied by corporate law or industrial organization …

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 …

Collective Bargaining And The Coase Theorem, Stewart J. Schwab

Cornell Law Faculty Publications