Coase Theorem Essay Examples

Over the years, many concepts have been proposed on how to remedy sub-par conditions, the Coase Theorem being an interesting example. The Coase Theorem provides an explanation of how these conditions can be resolved and will be discussed in relation to a specific example.
One example of a suboptimal condition is that of property damage. Person A had decided to build a go-kart course, but during this process, Person B believed that the course has been built on part of his land, thereby decreasing his property value. On the other hand, Person A believes that the course was built all on his own land. In this situation, it is uncertain to who the property. As a result, Person B is unhappy because he believes his property value has been decreased. Not only this, but the go-karts are frequently used and considerably noisy. Person A is happy because he gets to enjoy a go-kart course. This situation is suboptimal because Person B’s property has been devalued and the noise is disruptive to Person B’s standard of living.

That is, Person B’s property value has decreased because Person A has built the go-kart course. This harm stems from the property damage and the excessive noise. The Coase Theorem is useful because it provides a means to a different and better end. The theorem states that it does not matter who owns the property as long as the property has an owner, a solution can be reached (Wellhausen, 24 January 2018). The Coase Theorem provides insight on the ideas that unsatisfactory conditions can be changed into an optimal situation. Not only this but it minimizes the costs that are incurred upon all actors (Coase, 43). This idea is useful because it can be applied to different situations, and when successful, it will lead to an optimal