Efficiency and Invariance
Because Ronald Coase himself did not originally intend to set forth any one particular theorem, it has largely been the effort of others who have developed the loose formulation of the Coase theorem. What Coase initially provided was fuel in the form of “counterintuitive insight” that externalities necessarily involved more than a single party engaged in conflicting activities and must be treated as a reciprocal problem. His work explored the relationship between the parties and their conflicting activities and the role of assigned rights/liabilities. While the exact definition of the Coase theorem remains unsettled, there are two issues or claims within the theorem: the results will be efficient and the results in terms of resource allocation will be the same regardless of initial assignments of rights/liabilities.
Read more about this topic: Coase Theorem
Famous quotes containing the words efficiency and and/or efficiency:
“Nothing comes to pass in nature, which can be set down to a flaw therein; for nature is always the same and everywhere one and the same in her efficiency and power of action; that is, nature’s laws and ordinances whereby all things come to pass and change from one form to another, are everywhere and always; so that there should be one and the same method of understanding the nature of all things whatsoever, namely, through nature’s universal laws and rules.”
—Baruch (Benedict)
““Never hug and kiss your children! Mother love may make your children’s infancy unhappy and prevent them from pursuing a career or getting married!” That’s total hogwash, of course. But it shows on extreme example of what state-of-the-art “scientific” parenting was supposed to be in early twentieth-century America. After all, that was the heyday of efficiency experts, time-and-motion studies, and the like.”
—Lawrence Kutner (20th century)