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Coase Theorem

Peyton Manning · 2010-08-19 15:34:18

Quick question guys - why is the Coase Theorem unlikely to achieve the optimal level of pollution when the polluter is a monopolist?

19-08-2010 4:34pm

#1

Peyton Manning

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Quick question guys - why is the Coase Theorem unlikely to achieve the optimal level of pollution when the polluter is a monopolist?

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#2 19-08-2010 5:22pm

Time Magazine

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Dunno. Possibly because their output is not optimal in the first place.

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#3 19-08-2010 6:47pm

Peyton Manning

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Time Magazine wrote: »

Dunno. Possibly because their output is not optimal in the first place.

Aye, well I'd have guessed it's to do with producing at MC = MR. Just trying to find something concrete you can expand on is difficult without sounding too vague. Im sure there's some sort of link between their own MC and the MC to society from pollution, but like I said, just tricky to write about

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#4 20-08-2010 1:15pm

Économiste Monétaire

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Do you mean a simple Edgeworth box—two person, two good—economy where one person has monopoly power, i.e. they can set prices? You could just alter the usual monopoly picture here, illustrating inefficiency for, say, money and clean air/water/whatever.

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