The long run. Some commentators thought that the Coase Theorem might be true in the short run

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The long run. Some commentators thought that the Coase Theorem might be true in the short run but not in the long run. In the example of the farmer and the rancher, changing the use of fields takes time. For example, to convert a field from grazing land to farmland, the farmer must fence and plough the land. The efficiency of the Coase Theorem in the long run depends on the ability of private bargaining to accommodate any additional costs of altering resource use over long time periods as relative prices and opportunity costs change. Discuss some ways that a contract for long-run cooperation between the rancher and the farmer would differ from a contract for short-run cooperation.

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Law and economics

ISBN: 978-0132540650

6th Edition

Authors: Robert cooter, Thomas ulen

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