A RESPONSE TO BROOKS' SUPPORT OF DEMSETZ ON THE COASE THEOREM

Abstract

Coase (1960) claimed that in the zero costs world, it would not matter for the allocation of resources which of two disputants were awarded the relevant property rights. Block (1977) disputed this, on the ground that it assumed that both parties would have the wherewithal with which to make the relevant bribe. Demsetz (1977) maintained that Block (1977) failed to reckon with Coase‘s (1960) explicit assumption of no wealth effects. Block (1995) disputed this claim of Demsetz‘s (1977), claiming the Coase (1960) anticipated no such thing. The next round in this debate was Demsetz (1997) who reiterated his position, followed by Block (2000) in a response to Demsetz (1997). Brook (2007) mostly takes Demsetz‘s (1977, 1997) side of this ongoing discussion. The present paper is a rejoinder to Brook (2007), supporting Block (1997, 1995, 2000).