The Problem Of Social Cost
'The Problem of Social Cost' (1960) by Ronald Coase is an article dealing with economic problem of externalities. It draws from a number of English legal cases and statutes to illustrate Coase's belief that legal rules are only justified by reference to a cost benefit analysis, and that nuisances that are often regarded as being the fault of one party are more symmetric conflicts between the interests of the two parties. If there were no such things as the costs of doing a transaction, legal rules would be irrelevant to the maximization of production. Because in the real world there are costs of bargaining and information gathering, legal rules are justified to the extent of their ability to allocate rights to the most efficient right-bearer. Along with an earlier article, The Nature of the Firm, this was cited as being a reason for Coase's award of the Nobel Memorial Prize in Economic Sciences in 1991. As of June 2012, The Problem of Social Cost is the most cited law review article in history.
Read more about The Problem Of Social Cost: Summary, Theoretical Challenges, Cases and Statutes, See Also
Famous quotes containing the words problem, social and/or cost:
“I don’t have any problem with a reporter or a news person who says the President is uninformed on this issue or that issue. I don’t think any of us would challenge that. I do have a problem with the singular focus on this, as if that’s the only standard by which we ought to judge a president. What we learned in the last administration was how little having an encyclopedic grasp of all the facts has to do with governing.”
—David R. Gergen (b. 1942)
“But look what we have built ... low-income projects that become worse centers of delinquency, vandalism and general social hopelessness than the slums they were supposed to replace.... Cultural centers that are unable to support a good bookstore. Civic centers that are avoided by everyone but bums.... Promenades that go from no place to nowhere and have no promenaders. Expressways that eviscerate great cities. This is not the rebuilding of cities. This is the sacking of cities.”
—Jane Jacobs (b. 1916)
“In the early days of the world, the Almighty said to the first of our race “In the sweat of thy face shalt thou eat bread”; and since then, if we except the light and the air of heaven, no good thing has been, or can be enjoyed by us, without having first cost labour.”
—Abraham Lincoln (1809–1865)