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THE COASE THEOREM: ASSUMPTIONS, APPLICATIONS AND AMBIGUITIES
Author(s) -
DALY GEORGE
Publication year - 1974
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1974.tb00240.x
Subject(s) - coase theorem , proposition , test (biology) , economics , mathematical economics , welfare , positive economics , neoclassical economics , microeconomics , epistemology , transaction cost , philosophy , market economy , paleontology , biology
The consequence is that, whereas the normal way of testing a theory in positive economics is to test its conclusions, the normal way of testing a welfare proposition is to test its assumptions. The significance of this should not be overlooked. In positive economics we often simplify our assumptions as cavalierly as we please, being confident in the knowledge that their appropriateness will be tested when we come to apply the conclusions inherent in them to our observations of the world about us. In welfare economics we can entertain no such confidence. The result is that our assumptions must be scrutinized with care and thoroughness.