Steven G. Medema is Professor of Economics at the University of Colorado Denver. His research focuses most heavily (but not exclusively) on the post-WWII history of economics, with particular attention to economists’ views of the roles of market and state in economic activity and the extension of economic analysis beyond its traditional boundaries. He served as editor of the Journal of the History of Economic Thought from 1998-2008, and his latest book, The Hesitant Hand: Taming Self-Interest in the History of Economic Ideas, was published by Princeton in 2009.
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Ronald Coase, who passed away last week at age 102, spent his academic career swimming against the current.
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When externalities are present and transaction costs are absent, private parties will strike welfare-enhancing deals regardless of who owns what. In a frictionless world, bargaining leads to efficiency. That is the essence of the Coase Theorem, and it is fiction, according to Steven Medema.