Though we have not discussed Coase in class recently, thinking back, his ideas made me wonder as to why we do not see Coasian solutions to externalities occur more often in reality. It seems like such a good idea in theory - being able to come up with a market solution to a negative (or positive) externality conundrum. In particular, I was reminded of Coase when I was on the Amtrak from Charlottesville to Trenton, New Jersey for fall break. It was a very crowded train, as one might expect on that date, and in front of me, two people were chatting rather loudly. At first, this did not bother me; after all, what's wrong with two friends reconnecting on a good old train ride?
But when we were approaching the fifth hour of this journey and the clock struck midnight, the frankly incessant talking had begun to wear me down: a negative externality was being imposed on me. Coase would have encouraged me to negotiate a solution with these people to stop them from talking; perhaps $20 or so would be a fair arrangement. But herein lies the problem; even if both parties would be content with that payment, I would never actually propose this solution, for fear of social embarrassment. This is why, I believe, Coasian solutions are seldom seen in practice - there is a rather large transaction cost to ask somebody you don't know to stop what they are doing, and thus imply that they are negatively impacting society.
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