Monday, July 03, 2006

Coase In The Dark On Lighthouses

The "nobel" laureate, Ronald Coase, has some views on public finance and lighthouses. He mentions these views, for example, in a 1997 interview with Reason.

The most recent unrefuted view in the peer-reviewed journal literature, as far as I know, is that Coase is wrong on the facts:
"In 'The Lighthouse in Economics' (Coase, R. H., Journal of Law and Economics, vol. 17, no. 2, 357-76, 1974), Coase reached the conclusion that in England there existed a relatively efficient privately financed lighthouse system, which would refute economists' traditional statements concerning the production of public goods. The purpose of this paper is to challenge his conclusion. We first show that, from a methodological and theoretical perspective, 'The Lighthouse' is consistent with 'The Problem of Social Cost' (Coase, R. H. Journal of Law and Economics, vol. 3, 1-44, 1960). Then, applying Coase's own method (historical case studies), we attempt to re-examine the respective roles and efficiencies of private initiative and government." -- Elodie Bertrand (2006).

This is not a topic that I have a strong opinion on. But I find that some of the more stupid worshippers of Mammon one might meet on the Internet have a tendency to bring Coase up.

  • Bertrand, Elodie (2006). "The Coasean Analysis Of Lighthouse Financing: Myths And Realities", Cambridge Journal of Economics, V. 30: 389-402.

1 comment:

Anonymous said...

More on Coase and lighthouses at dsquared.