In my last blog post, I explained that I provide the collective good of washing the dishes because my personal benefit exceeds my roommates. This allows my roommates to free-ride off of my provision of the collective good due to the group being a privileged group. However, this past week one of my roommates offered to pay me to keep doing the dishes. This shouldn't make sense, because he has the property right to use plates as he sees fit and his cost is greater than his benefit. If an outside observer doesn't look too closely at the situation, it would seem like this is not the result that Coase would expect.
This seems to be a misallocation of resources because he can free ride instead of paying me anything. However, roommates tend to have interdependent utility because their daily activities often involve interactions with each other. My roommate paying me raises his expected utility because now I am less likely to loudly rant about how no one does the dishes and am more likely to help him when he needs assistance. The amount he paid me represents a portion of his valuation of dishwashing. As a result, I now get some producer surplus from doing something that I am already inclined to do based on my own utility function.
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