The Curious Treatment of the Coase Theorem in the Environmental Economics Literature, 1960--1979

Steven Medema ()

Review of Environmental Economics and Policy, 2014, vol. 8, issue 1, 39-57

Abstract: This article examines the first two decades of the history of the Coase theorem in environmental economics, a period during which the theorem's validity was widely acknowledged but its relevance for economic analysis of environmental issues was almost universally dismissed. The repeated claims of the theorem's irrelevance and its dismissive treatment in the literature raise the question of why environmental economists were so interested in the Coase theorem in the first place. Several explanations are offered here including the roots of environmental economic theory in the theory of externalities, economists' fascination with the interesting and challenging theoretical puzzle posed by the theorem, and the normative and ideological thrust that permeated discussions of the theorem, both within and outside the field of environmental economics. (JEL: B20, D62, K32, Q50, R11) Copyright 2014, Oxford University Press.

Date: 2014
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