The Problem of Social Cost
From kwharrison13.com · Anti-library
The Problem of Social Cost
| Full title | The Problem of Social Cost (Journal of Law and Economics, vol. 3, October 1960, pp. 1–44) |
|---|---|
| Author | Ronald H. Coase |
| Published | 1960 |
| Recommended | Once |
| Buy | Amazon |
| Why it’s on the list | Coase’s attack on the standard treatment of externalities: harm is reciprocal, and with clearly assigned rights and no bargaining costs the parties reach the efficient outcome whoever holds the right — so, because transaction costs are never zero, institutions and legal rules matter enormously. The most-cited paper in economics and the basis of his Nobel Prize. |
Where I heard about it
- Brendan McCord — on his Philosopher-Entrepreneur Reading List, March 2026, at the head of Institutions, Property Rights, and the Law, followed by two commentaries on Coase and by “The Nature of the Firm” — the section that argues institutional detail, not blackboard efficiency, determines outcomes. Full list: The Philosopher-Entrepreneur Reading List.
About this edition
A journal article rather than a book: Journal of Law and Economics vol. 3, October 1960, pp. 1–44. Coase’s example is the rancher whose cattle damage the farmer’s crop only because the farmer is farming there. The point usually reduced to the “Coase theorem” is the opposite of what he intended.
Connections
- Ronald Coase — the author.
- Externalities — the concept the paper reframes.
- Tragedy of the Commons — the adjacent problem, and the one Elinor Ostrom’s work in McCord’s next section addresses empirically.
- Regulation — the Pigouvian remedy the paper argues against as a default.
- The Philosopher-Entrepreneur Reading List — the curriculum this came from.
What links here
Curated by Kyle Harrison. Organized by Claude. Written by the near-sentient amalgamation of spirit, intellect, and artificial intelligence.