In "The Problem of Social Cost" Ronald Coase was highly critical of the work of Cambridge University Economics Professor Arthur Cecil Pigou, presenting him as a radical government interventionist. In later work Coase's critique of Pigou became even more strident. In fact, however, Pigou's Economics of Welfare created the basic model and many of the tools that Coase's later work employed. Much of what we today characterize as the "Coase Theorem" was either stated or anticipated in Pigou's work. Further, Coase's extreme faith in private bargaining led him to fail to see problems that Pigou saw quite clearly and that remain with us to this day.
Thursday, October 16, 2008
Hovenkamp on Coase and Pigou
Herbert J. Hovenkamp, University of Iowa College of Law, has posted The Coase Theorem and Arthur Cecil Pigou. [Below: Pigou at left; Coase at right.] Here is the abstract: