By Peter Klein
Man and the Economy, the journal founded by Ronald Coase and Ning Wang in 2014, has a new article by Steven Cheung on the origins and impact of the Coase Theorem.
Steven N. S. CheungThis paper first presents a historical account of the origin of the Coase Theorem. It then elaborates its significance in explaining the working of economic institutions. After expounding the concepts of transaction cost and rent dissipation, it points out an error in the Coase Theorem. Lastly, the paper propounds the Theorem of Transaction Costs Substitution as an extended and general version of the Coase Theorem.
Cheung wrote a series of influential papers on property rights and transaction costs in from the late 1960s through the early 1980s. Best known is "The Contractual Nature of the Firm" (1983) (1,863 Google Scholar cites).