Coase Revisited: Economic Efficiency under Externalities, Transaction Costs and Non-Convexity

Jean-Paul Chavas ()

No 149682, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association

Abstract: This paper presents a general equilibrium analysis of economic efficiency under externalities, transaction costs and non-convexity. It applies to market exchange as well as contractual arrangements. We show that the Coase theorem continues to hold under general conditions: the efficient management of externalities remains consistent with aggregate profit maximization under transaction costs and non-convexity. We examine the role of transaction costs and explore how the minimization of transaction costs is an integral part of efficient allocations. We also show how our analysis applies under non-convex technology, provided that we allow for non-linear pricing in markets.

Keywords: Institutional and Behavioral Economics; Political Economy; Public Economics (search for similar items in EconPapers)
Pages: 13
Date: 2013
New Economics Papers: this item is included in nep-mic
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Journal Article: Coase Revisited: Economic Efficiency under Externalities, Transaction Costs, and Nonconvexity (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea13:149682

DOI: 10.22004/ag.econ.149682

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