Unfortunately, contemporary economists have failed dramatically to appreciate the subtly of Coase's work.
Coase is famous for his work in showing that in the absence of transaction costs, and assuming an efficient market for a good, the market would equilibrate in a way where the good was allocated to its highest-value uses, regardless of the initial distribution of the good.
The theorem is very often used to justify deregulation and privatization in various areas, and modern economists almost uniformly give short-shrift to the assumptions underlying the theory. From the above-cited paper: "The fact that actions might have harmful effects on others has been shown to be no obstacle to the introduction of property rights. But it was possible to reach this unequivocal result because the conflicts of interest were between individuals. When large numbers of people are involved, the argument for the institution of property rights is weakened and that for general regulations becomes stronger." (Ronald Coase, the Federal Communications Commission at 29).
Economists qua economists broadly support socially optimal allocations of property rights. Whether they are Pareto-improving or not is beside the point, from a strictly economic perspective, because any socially optimal allocation can be made Pareto-improving through transfers. That this doesn't actually happen is a political problem, not an economic one.
Classic 1937 essay, inspired by the question: if market economies are successful, why do we have firms (companies), rather than large numbers of individual free agents contracting with each other? And under what conditions do firms have an advantage vs. a market system that goes all the way down to the individual?
Unfortunately, contemporary economists have failed dramatically to appreciate the subtly of Coase's work.
Coase is famous for his work in showing that in the absence of transaction costs, and assuming an efficient market for a good, the market would equilibrate in a way where the good was allocated to its highest-value uses, regardless of the initial distribution of the good.
The theorem is very often used to justify deregulation and privatization in various areas, and modern economists almost uniformly give short-shrift to the assumptions underlying the theory. From the above-cited paper: "The fact that actions might have harmful effects on others has been shown to be no obstacle to the introduction of property rights. But it was possible to reach this unequivocal result because the conflicts of interest were between individuals. When large numbers of people are involved, the argument for the institution of property rights is weakened and that for general regulations becomes stronger." (Ronald Coase, the Federal Communications Commission at 29).