The law of property determines who owns something, but the market determines how it will be used.
Ronald Coase
I've been wrong so often, I don't find it extraordinary at all.
People have used my views for purposes which are very different from mine.
Economics as currently presented in textbooks and taught in the classroom does not have much to do with business management, and still less with entrepreneurship.
I tend to regard the Coase theorem as a stepping stone on the way to an analysis of an economy with positive transaction costs.
During the two centuries since the publication of 'The Wealth of Nations,' the main activity of economists, it seems to me, has been to fill the gaps in Adam Smith's system, to correct his errors and to make his analysis vastly more exact.
The main reason why it is profitable to establish a firm would seem to be that there is a cost of using the price mechanism. The most obvious cost of 'organizing' production through the price mechanism is that of discovering what the relevant prices are.
You should not forget that without all the work in law and economics, a great part of which has been supported by the John M. Olin Foundation, it is doubtful whether the importance of my work would have been recognized.
In my long life, I have known some great economists, but I have never counted myself among their number nor walked in their company.
Changes like the telephone and telegraphy, which tend to reduce the cost of organizing spatially, will tend to increase the size of the firm.
The tools used by economists to analyze business firms are too abstract and speculative to offer any guidance to entrepreneurs and managers in their constant struggle to bring novel products to consumers at low cost.
What I have done is to show the importance for the working of the economic system of what may be termed the institutional structure of production.
I'm no enthusiast for the Coase Theorem. I don't like it, but it's widely used.
You wouldn't think there was a need for a Coase Theorem, really.
The pollution problem is always seen as someone who was doing something bad that has to be stopped. To me, pollution is doing something bad and good. People don't pollute because they like polluting. They do it because it's a cheaper way of producing something else.
Roughly speaking, when you are dealing with business firms operating in a competitive system, you can assume that they're going to act rationally. Why? Because someone in a firm who buys things at $10 and sells them for $8.00 isn't going to last very long in that firm.
You get more irrationality within the family and in consumer behavior than you get, say, in the behavior of firms in their purchases.
Despite all the efforts of art dealers, the number of Rembrandts existing at a given time is limited; yet such paintings are commonly disposed of by auction.
There is no doubt that the recognition by economists of the importance of the role of the firm in the functioning of the economy will prompt them to investigate its activities more closely.
Technology is at a point where we should allow multiple parties to occupy the same spectral space.
