Conference: Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase

Friday, December 4 to Saturday, December 5, 2009

University of Chicago Law School Auditorium


This Conference brings together a group of scholars to honor the life and research of Ronald Coase. 2009 marks the 50th anniversary of the publication of Coase’s seminal paper on the Federal Communications Commission. 2010 marks the 50th anniversary of the publication of his paper on “The Problem of Social Cost,” and his 100th birthday.  The presentations on this occasion cover specific topics on which Coase’s work has exerted profound influence, including such areas as telecommunications policy, airline regulation and development, environmental economics, economic development, organization of the firm, and general discussions of the questions of transactions costs and social rationality to which he has contributed so much.

 With Special Thanks:

The Conference is being organized by Richard A. Epstein of the University of Chicago, Thomas Hazlett of George Mason University, and Roger Noll and Greg Rosston of Stanford University. These papers shall be published in special issues of the Journal of Law and Economics and the Journal of Legal Studies.

Sponsors include:

John M. Olin Program in Law and Economics at the University of Chicago Law School
Stanford Institute for Economic Policy Research
Information Economy Project at George Mason University
Ewing Marion Kauffman Foundation
Milton Friedman Institute for Research in Economics
George J. Stigler Center for the Study of the Economy and the State
China Center for Economic Research
Lynde and Harry Bradley Foundation

Participants include:

Gary Becker
Omri Ben-Shahar
Lee Benham
Xiaofang Chen
Lennon H.T. Choy
Ronald H. Coase
Robert Cooter
Peter Cramton
Harold Demsetz
Richard Epstein
Sebastian Galiani
Robert Hahn
Thomas Hazlett
Charles Jackson
Evan Kwerel
William Landes
Michael E. Levine
Zhimin Liao
Gary Libecap
Thomas Merrill
Roger Noll
Douglass North
Sam Peltzman
David Porter
Richard A. Posner
Greg Rosston
Michael Schill
Steven Shavell
Mary Shirley
Vernon Smith
Robert Stavins
Geoffrey Stone
Robert Topel

Conference Agenda:

Friday, December 4th

8:00 Breakfast

8:30 – 9:00 Videotaped Remarks by Professor Coase

9:00– 10:45 Moderator: Lee Benham, Washington University, St. Louis

The Effect of Allowance Allocation on Cap-and-Trade System Performance
Robert Hahn, Smith School, University of Oxford
Robert Stavins, Harvard University

Coase, Transaction Costs, and the Spread of the Rectangular Survey for Land Demarcation within the British Empire
Gary Libecap, University of California, Santa Barbara
Dean Lueck, University of Arizona
Trever O’Grady, University of California, Santa Barbara

11:15 – 1:00 Moderator: Sam Peltzman, University of Chicago

Coase and the New Zealand Spectrum Reforms
Charles Jackson, George Washington University

Using Spectrum Auctions to Enhance Competition in Wireless Services
Peter Cramton, University of Maryland
Evan Kwerel, Federal Communications Commission
Greg Rosston, Stanford University
Andy Skrzypacz, Stanford University

Radio Spectrum and the Disruptive Clarity of Ronald Coase
Thomas Hazlett, George Mason University
David Porter, Chapman University
Vernon Smith, Chapman University

1:00 – 2:00 Lunch

2:00 – 3:45 Panel 3

Moderator: Mary Shirley, Coase Institute

Opening Remarks
Douglass North, Washington University, St. Louis

Reducing Transaction Costs through Securing Property Rights: What Are the Effects of Land Titling Policies?
Sebastian Galiani, Washington University, St. Louis, Coase Institute Fellow

Why the Entry Regulation of the China Mobile Phone Manufacturing Industry Collapsed: The Impact of Technological Innovation on Institutional Transformation
Zhimin Liao, Harvard Law School and Beijing University, Coase Institute Fellow
Xiaofang Chen, Renmin University of China Law School, Coase Institute Fellow

Let the Buyer — or Seller — Beware?  How Housing Can Become Durable Lemons under Different Structures of Property Rights and Information
Lennon H.T. Choy, The Hong Kong Polytechnic University, Coase Institute Fellow
K.W. Chau, The University of Hong Kong

4:15 – 5:45 Panel 4

Moderator: Douglass North, Washington University, St. Louis

How to Keep a Secret: The Decisive Advantage of Corporations
Robert Cooter, University of California, Berkeley

Regulatory Institutions and Economic Performance: Wireless Communications in Middle-Income Developing Nations
Roger Noll, Stanford University

5:45 Adjourn

Saturday, December 5th

8:00 Breakfast

8:30 – 10:15 Panel 1

Moderator: Robert Topel, University of Chicago

Competence as a Random Variable: One More Tribute to Ronald Coase
Richard A. Epstein, University of Chicago

R.H. Coase and the Neoclassical Model of the Economic System
Harold Demsetz, UCLA

Measuring Coase’s Influence
William Landes, University of Chicago

10:45 – 12:30 Panel 2

Moderator: Omri Ben-Shahar, University of Chicago

On the Limited Utility of Taxes as a Solution to the Externality Problem
Steven Shavell, Harvard University

Coase and the Mental Picture of Property Rights
Thomas Merrill, Yale University

Regulation and the Nature of the Firm: The Case of U.S. Regional Airlines
Michael E. Levine, New York University

12:30 – 1:30 Lunch

1:30 – 3:15 Panel 3

Moderator: Michael Schill, University of Chicago

Coase, Edgeworth, and Pigou
Gary Becker, University of Chicago

Commercial Advertising and the First Amendment
Geoffrey Stone, University of Chicago

Keynes and Coase
Richard A. Posner, University of Chicago

3:15 Adjourn

CoasePoster.pdf

Coase Conference Packet Final.pdf

Other Coverage of the Conference:


Of Special Note:

In celebration of Ronald Coase’s 100th birthday in December 2010, Wang Ning from the China Coase Society interviewed Professor Coase for the Unirule Institute of China conference in Beijing, “Coase and China.”  The interview deals with Coase’s new paper on Chinese economic development.

Interview with Professor Ronald Coase, by Wang Ning, Chicago, IL, December 2010

Video Coverage of Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase:

Video Message from Professor Coase:

 

Video Coverage of Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase:

http://mindonline.uchicago.edu/media/law/coase_120409_panel1_512K.mov

http://www.law.uchicago.edu/lawecon/events/conferences/video/marketsfirmspropertyrights-1

Friday Panel 1: Moderator: Lee Benham, Washington University, St. Louis; The Effect of Allowance Allocation on Cap-and-Trade System Performance, Robert Hahn, Smith School, University of Oxford, Robert Stavins, Harvard University; Coase, Transaction Costs, and the Spread of the Rectangular Survey for Land Demarcation within the British Empire, Gary Libecap, University of California, Santa Barbara, Dean Lueck, University of Arizona, Trever O’Grady, University of California, Santa Barbara

http://mindonline.uchicago.edu/media/law/coase_120409_panel2_512K.mov

http://www.law.uchicago.edu/lawecon/events/conferences/video/marketsfirmspropertyrights-2

Friday Panel 2: Moderator: Sam Peltzman, University of Chicago; Coase and the New Zealand Spectrum Reforms, Charles Jackson, George Washington University; Using Spectrum Auctions to Enhance Competition in Wireless Services, Peter Cramton, University of Maryland, Evan Kwerel, Federal Communications Commission, Greg Rosston, Stanford University, Andy Skrzypacz, Stanford University; Radio Spectrum and the Disruptive Clarity of Ronald Coase, Thomas Hazlett, George Mason University, David Porter, Chapman University, Vernon Smith, Chapman University

http://mindonline.uchicago.edu/media/law/coase_120409_panel3_512K.mov

http://www.law.uchicago.edu/lawecon/events/conferences/video/marketsfirmspropertyrights-3

Friday Panel 3: Moderators: Mary Shirley, Coase Institute; Opening Remarks, Douglass North, Washington University, St. Louis; Reducing Transaction Costs through Securing Property Rights: What Are the Effects of Land Titling Policies? Sebastian Galiani, Washington University, St. Louis, Coase Institute Fellow; Why the Entry Regulation of the China Mobile Phone Manufacturing Industry Collapsed: The Impact of Technological Innovation on Institutional Transformation, Zhimin Liao, Harvard Law School and Beijing University, Coase Institute Fellow, Xiaofang Chen, Renmin University of China Law School, Coase Institute Fellow; Let the Buyer — or Seller — Beware? How Housing Can Become Durable Lemons under Different Structures of Property Rights and Information, Lennon H.T. Choy, The Hong Kong Polytechnic University, Coase Institute Fellow, K.W. Chau, The University of Hong Kong

http://mindonline.uchicago.edu/media/law/coase_120409_panel4_512K.mov

http://www.law.uchicago.edu/lawecon/events/conferences/video/marketsfirmspropertyrights-4

Friday Panel 4: Moderator: Douglass North, Washington University, St. Louis; How to Keep a Secret: The Decisive Advantage of Corporations, Robert Cooter, University of California, Berkeley; Regulatory Institutions and Economic Performance: Wireless Communications in Middle-Income Developing Nations, Roger Noll, Stanford University

http://mindonline.uchicago.edu/media/law/coase_120509_panel1_512K.mov

http://www.law.uchicago.edu/lawecon/events/conferences/video/marketsfirmspropertyrights-5

Saturday Panel 1: Moderator: Robert Topel, University of Chicago; Competence as a Random Variable: One More Tribute to Ronald Coase, Richard A. Epstein, University of Chicago; R.H. Coase and the Neoclassical Model of the Economic System, Harold Demsetz, UCLA; Measuring Coase’s Influence, William Landes, University of Chicago

http://mindonline.uchicago.edu/media/law/coase_120509_panel2_512K.mov

http://www.law.uchicago.edu/lawecon/events/conferences/video/marketsfirmspropertyrights-6

Saturday Panel 2: Moderator: Omri Ben-Shahar, University of Chicago; On the Limited Utility of Taxes as a Solution to the Externality Problem, Steven Shavell, Harvard University; Coase and the Mental Picture of Property Rights, Thomas Merrill, Yale University; Regulation and the Nature of the Firm: The Case of U.S. Regional Airlines, Michael E. Levine, New York University

http://mindonline.uchicago.edu/media/law/coase_120509_panel3_512K.mov

http://www.law.uchicago.edu/lawecon/events/conferences/video/marketsfirmspropertyrights-7

Saturday Panel 3: Moderator: Michael Schill, University of Chicago; Coase, Edgeworth, and Pigou, Gary Becker, University of Chicago; Commercial Advertising and the First Amendment, Geoffrey Stone, University of Chicago; Keynes and Coase, Richard A. Posner, University of Chicago

Conference Articles:

Friday Sessions

The Effect of Allowance Allocation” by Robert W. Hahn & Robert N. Stavins.  We begin with “The Problem of Social Cost” (1960) … The Coase Theorem: Bilateral negotiation between the generator and recipient of an externality leads to the same efficient outcome regardless of the initial assignment of property rights (if no transaction costs, income effects, or third-party impacts).

Coase, Transaction Costs, and the Spread of the Rectangular Survey for Land Demarcation within the British Empire” by Gary D. Libecap, Dean Lueck, Trevor O’Grady.  This paper examines adoption of the rectangular system (RS) of land demarcation within European settlement colonies of the British Empire in the 18th and 19th centuries. This was a time when agricultural land markets were first developing on a widespread scale. These jurisdictions had similar immigrant populations and legal structures, but their land demarcation practices were quite different.

Coase and the New Zealand Spectrum Reforms” by Charles L. Jackson. In 1989, New Zealand’s Parliament enacted a new statute, the Radiocommunications Act 1989, that explicitly used a system of property rights to regulate the use of the radio spectrum. This statute resulted in the first ever spectrum auctions – and New Zealand’s use of auctions has been copied around the globe. New Zealand’s adoption of a property rights regime, a more fundamental change than the introduction of spectrum auctions, has not had the same wide acceptance.

Radio Spectrum and the Disruptive Clarity of Ronald Coase” by Thomas W. Hazlett, David Porter, Vernon Smith. In the Federal Communications Commission,5 Ronald Coase exposed deep foundations via normative argument buttressed by astute historical observation. The government controlled scarce frequencies, issuing sharply limited use rights. Spillovers were said to be otherwise endemic. Coase saw that Government limited conflicts by restricting uses; property owners perform an analogous function via the “price system.” The government solution was inefficient unless the net benefits of the alternative property regime were lower.

Why the Entry Regulation of the China Mobile Phone Manufacturing Industry Collapsed” by Zhimin Liao, Xiaofang Chen. This case study aims to explore an interesting puzzle: why the license regulation in China’s mobile phone production industry, which generated large rents for an once powerful interest group, was suddenly eliminated.

How to Keep a Secret: The Decisive Advantage of Corporations” by Robert Cooter.  In the 1950s socialists around the world built gigantic steel plants like Nowa Huta in Poland. By the 1980s they were losing vast amounts of money and they seemed destined to die a slow death by rust. Lakshmi Mittal, who led the international operation of an Indian steel business built by his father, believed that these industrial dinosaurs could flourish in the age of mammals.

Regulatory Institutions and Economic Performance: Wireless Communications in Middle-Income Developing Nations” by Roger Noll.  Wireless Success Story: Over 4 billion wireless subscribers worldwide in 2009 (compared to 1.3 billion wire lines) Wireless penetration in developing nations around 50% of population, over 100% in some middle income nations (several higher than US = 90%) 2. Generally good1 policies in nations not noted for good economic policies Mostly privatized Multiple firms (3+ in most nations) Permit foreign ownership Narrow, targeted regulation Licenses transferable.

Saturday Sessions

Competence as a Random Variable: One More Tribute to Ronald Coase” by Richard A. Epstein. The work of Ronald Coase is notable for how it introduces the notion of transactions costs to explain both the creation and maintenance of firms and for understanding the larger question of social costs. Nonetheless, it seems improbable that positive transaction costs are the only explanation as to why and how firms are organized.

R.H. Coase and the Neoclassical Model of the Economic System” by Harold Demsetz. It is clear from articles I have written for the New Palgrave Dictionary of Law and Economics and other publications that I have high regard for Coase and his works. Some would say I have published parts of his works more times than has he. True or not, my role in explaining, defending, and extending Ronald’s writings has left me with little to say that is different from what I have already written, so my theme today is not a product of conscious deliberation.

Measuring Coase’s Influence” by William M. Landes and Sonia Lahr-Pastor. Citations measure a scholar’s influence. That Ronald Coase is among the most influential and best-cited economists in the past fifty years is not debatable. Two of his articles, “The Nature of the Firm”, published in 1937, and “The Problem of Social Cost”, published in 1960, are among the most-cited articles in both economics and law and continue to be widely cited.

Regulation and the Nature of the Firm: The Case of U.S. Regional Airlines” by Michael E. Levine. The organization of airline networks, and particularly of the interaction between the less dense parts of the network with the more dense parts, is a particularly good example of the operation of two of Professor Coase’s main points in “The Nature of the Firm” and subsequent articles: first, that the choice of institutions chosen to organize production is a function of economic circumstances, including regulation, technology and contractual arrangements inside the firm and second, that there is no general outcome that economic theory predicts, but rather that the result always depends on the particular circumstances and choices available and that it will change as circumstances change.

Commercial Advertising and the First Amendment” by Geoffrey R. Stone. In his path-breaking 1977 article, Advertising and Free Speech, Ronald Coase challenged the conventional wisdom in an important area of First Amendment law. What especially interested Coase was the sharp divergence between the profound commitment to the free market in the realm of speech and the lack of confidence in the free market in the realm of goods and services. Invoking Justice Holmes’s claim that “the best test of truth is the power of the thought to get itself accepted in the competition of the market,” Coase noted that First Amendment doctrine is largely premised on “an extreme faith in the efficiency of competitive markets and a profound distrust of government regulation.” But in the realm of “goods and services,” the same “intellectual community” that celebrates the marketplace of ideas demands ever-more extensive government regulation. Coase suggested that this disparity “calls for an explanation,” but lamented that such an explanation “is not easy to find.”

Keynes and Coase” by Richard A. Posner.  I am sure that Ronald will not like my bracketing him with Keynes, as I am about to do. But if he is patient, he will hear me modify criticisms of his approach to economics that I made in an essay I wrote many years ago – sixteen to be exact – for the Journal of Economic Perspectives.

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