Time Is of the Essence: The Idea of the Corollary of the Coase Theorem and a Possible Application

Abstract

Extant theories on the application of the Coase Theorem to the development market have focused on the effects of zoning on the environment or upon property prices. As an original contribution to the Coasian research on the interface between the development market and the statutory planning machinery, this article seeks to develop a Coasian proposition informed by what has been called the corollary of the Coase Theorem, which allows for an empirical examination of the impact of property prices on decisions to use resources under different institutional arrangements. Our proposition is that the procedural steps taken to consume resources are not contingent on property prices unless the associated transaction costs are positive or property rights ambiguous.

Time Is of the Essence? An Empirical Application of the Corollary of the Coase Theorem

“…One particularly significant dimension of procedural steps is the time involved in the real world. As argued in , Lai et al (2007b), and Lai and Hung (2008), according to what may be termed "the corollary of the Coase Theorem" (Polinsky, 1974;Schwab, 1989;Hovenkamp, 1990;Cooter and Ulen, 1997;Lai, 1997;Cramton et al, 1998;Posner, 2001;Hsiung, 1999Hsiung, , 2001Lai and Lorne, 2003;Webster and Lai, 2003;Werin, 2003;Schmidt, 2006;Lai and Lorne, 2006), which is the practical application of the Coase Theorem, we may postulate as a general proposition that "procedural steps taken to use resources are not contingent on property rights assignment unless the associated transaction costs are positive or property rights are ambiguous." This postulation can be rephrased as the empirically refutable hypothesis, "the impact of market fundamentals on the number of planning applications would not be affected by changes in time limits on planning permissions."…”

Interpreting suboptimal business outcomes in light of the Coase Theorem: Lessons from Sidmouth International Festival

“…However, Ronald Coase did not call his insight (which today is recognised as immensely influential) a 'theorem'. This was done later by his Chicago colleague and fellow Nobel laureate George Stigler (Lai, 2007;Lai, Yung, & Ho, 2007). Although there are different versions of the Theorem, the most widely accepted is that 'given zero transaction costs and clearly defined property rights', resource allocation does 'not depend on the way rights and liabilities are assigned'.…”

Quality Assurance in Construction by Independent Experts: A Case Study of the Efficiency Performance of State-Owned Enterprises in China

“…. Based on the`corollary' of the Coase theorem (Lai, 2007;Lai et al, 2007;2008a;2008b), which assumes positive transaction costs and less than perfect property rights delineation, we may generally predict that improvements in property rights arrangements would also improve the efficiency of resource use (Lai and Hung, 2008;Lai et al, 2008a). According to Cheung (1974), a more complete delineation of property rights would lead to greater efficiency in resource use.…”