Problem of Social CostR. H. Coase
Problem of Social Cost
by R. H. Coase · first published 2016
13mentions
7recommended by
9HN commenters
2015–2023first – last mentioned
78% recommend22% neutral
Why HN recommends it
A short, readable essay that clarifies externalities and explains how property rights and bargaining shape who bears social costs. It serves as an accessible starting point for readers in economics and law.
Summarised by Claude from recommending comments
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…infringing what you perceive to be your rights yet you are unwilling to acknowledge that you are infringing their rights through these negative externalities. It would be worth reading Ronald Coase's "The Problem of Social Cost"[1] to perhaps refresh your knowledge of externalities. In it, he describes a situation (first described by Pigou) wherein a train catches a field on fire with sparks. He analyzes how if you force the…
See also Ronald Coase: The Problem of Social Cost. http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/03/r...
on “Santa Monica council votes 7-0 to crack down on Airbnb” ↗…externalities are a sufficient barrier to many pollutees that polluters are often willing to gamble on others' inability to adequately enforce their rights and pocket the resulting savings. * in The Problem of Social Cost, an unusually readable essay for the field of economics.
on “Why winners become cheaters” ↗The paper on the economics of this is The Problem of Social Cost by Ronald Coase. It's dense but readable, and a masterpiece of economic reasoning.
on “The Invisible Catastrophe: Record Methane Leak in CA” ↗Coase also had some fundamental insights into regulatory economics (insights which have been often misunderstood by modern neo-liberals). Two other excellent papers to read: The Problem of Social Cost (1960): http://econ.ucsb.edu/~tedb/Courses/UCSBpf/readings/coase.pdf The Federal Communications Commission (1959): http://web.ntpu.edu.tw/~guan/courses/Coase59.pdf.
on “The Nature of the Firm (1937)” ↗…government, not least because the more abstract the nature of the cost, the fewer people are able to comprehend its existence. If you're interested in this topic you may enjoy Ronald Coase's economic essay The Problem of Social Cost (which brought him a Nobel prize) and his body of work in general.
on “Facebook to add 3k people to community operations team to improve moderation” ↗His original papers are as accessible as popular press. The big ones are “Nature of the Firm” and “The Problem of Social Cost.” For the 2nd one, Coase complained it is used to reach the opposite conclusion than he intended.^ http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0335.1937.... http://home.cerge-ei.cz/ortmann/UpcesCourse/Coase%20-%20The%...…
on “The gig economy of the 18th Century” ↗There's a long discussion in Coase's classic "The Problem of Social Cost" about the apportionment of liability between railroads and landowners adjacent to the railways when fires are started by sparks from trains. http://home.cerge-ei.cz/ortmann/UpcesCourse/Coase%20-%20The%...…
on “PG&E-friendly wildfire bill being prepared by lawmakers in wake of lethal fires” ↗I was drafting an extensive response to this, but I am on a time crunch with my work schedule. If you are honestly interested in understand optimal solutions to externalities and handling the problem of social costs, I would recommend checking out Ronald Coase's paper "The Problem of Social Cost" for which he won the Nobel prize.[1] I will hopefully have time this weekend to draft my response. The TLDR is that,…
on “Snap launches its first drone” ↗…operate point-of-sale card swiping devices, I bet they significantly lower the transaction costs too. He won a Nobel Prize if that matters. I think his two seminal works, “The Nature of the Firm” and “The Problem of Social Cost” do really well to explain why tech is winning so much compared to traditional marketplaces. Especially “The Problem of Social Cost”, which explains how externalization of transaction costs creates advantageous…
on “Why There Aren't More Googles (2008)” ↗…things have no unequivocal decision metric. e.g. "We know it's not always fair but that's the way we have decided it goes, so everyone knows where they stand". I think this is demonstrated by Coase's "The Problem of Social Cost" [1] > 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.…
on “Ross: Attorney built on top of IBM's Watson” ↗…wrote great primers such as Rivalry and Central Planning and National Economic Planning: What Is Left? which equally apply to a mixed economy. R.H. Coase formulated the Coase theorem in his paper "The Problem of Social Cost," demonstrating how private property rights plus low transaction costs lead to endogenous self-regulatory actions. Oliver E. Williamson wrote a technical work on transaction cost economics entitled The…
on “Hi, I’m from the games industry. Governments, please stop us” ↗…everything out on a per task basis. The idea of minimising communication overhead being central to the existence of companies comes from the work of Ronald Coase. eg https://en.wikipedia.org/wiki/The_Problem_of_Social_Cost
on “Return to Office Is Bullshit and Everyone Knows It” ↗