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Article: Coasian contracts in the Coeur d'Alene mining district.
- Article from:
- The Cato Journal
- Article date:
- March 22, 2005
- Author:
CopyrightCOPYRIGHT 2005 Cato Institute. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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For the greater part of the 20th century, mainstream economists viewed negative externalities as a prima facie justification for government intervention in the market (see Bator 1958). Absent such government action, they argued, nothing would be done to prevent or remedy the damages suffered by third parties as a result of unrestrained "spillovers" or "neighborhood effects." For example, in the words of Joseph Stiglitz (1988: 76), "without government intervention there would be an underprovision of pollution control." Even such staunch defenders of the market as Milton Friedman (1962: 30) and F. A. Hayek (1979: 43-45) conceded that spillovers might justify government ...