I interned for Henrico County Managers Office this summer doing white paper writing. In the course of my internship, having already read Coase's Theorem, I designed a program to be administered by the county that served as a "Coasian" institution. We had a problem with tree overgrowth on elderly individuals' property that negatively impacted adjacent property owners and their safety. Therefore, the program reduced the transaction and search costs of the individuals to fix this problem as well as incentivizing businesses to help fix the problem. In early drafts of the paper, I had even included "Coasian Solutions" where adjacent property owners could go in on a contract to fix the problem, but with a clause that stipulated it wouldn't be fixed unless all parties agreed to prevent a hold out or free rider issue.
There was a producer (in this case the property owner) who had property rights, but one who was producing externalities by their inaction. The SMC > PMC creating clear dead weight loss. The correction, however, in my program, worked rather interestingly. The county would give a tax credit to a tree company to rectify the issue (similar to other county ordinance). Because there was also a slight cost to the producer (the elderly property owner) in terms of safety, they were partially incentivized to seek help through the program. The company would be compensated in tax credits (essentially a payment that made PMC = SMC) and the externality would be rectified.
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