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Business Organizations Law

Cornell University Law School

1991

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Full-Text Articles in Law

Coase, Rents, And Opportunity Costs, Stewart J. Schwab Oct 1991

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 ...