Ethics, Efficiency, Coasian Property Rights, and Psychic Income: A Reply to Demsetz

In his seminal article, Coase (1960) turned the world of economics upside down. I t might even be said that with one (longish) stroke of the pen, he created the entirely new sub-discipline of Law and Economics; and that he did so out of the ashes of a t least one part of the traditional field as i t stood before his onslaught: that occupied by Pigou (1932). Previously, the view of the profession regarding invasions against another person or his property was the classical liberal one of cause and effect. A was the perpetrator, B the victim. To be sure, there was some equivocation amongst the Pigovians as to whether the proper public policy response to this was to tax A in a n effort to force him to stop his depredations, or to give him a subsidy so as to entice him toward this end (ibid., p. 184). But the