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The Coase Theorem, the Lighthouse and the Future of a Frank Lloyd Wright House in Arizona
A funky Frank Lloyd Wright house may be demolished in Arizona. The owner of the property is free to choose to do what he/she wants with her property. Historic Preservation laws do not apply in Arizona but the Coase theorem would predict that a Wright Home is a public good and those who would lose from its destruction should band together if they face low transaction costs and can overcome free riding to make a bid to purchase and preserve the private property. The NY Times alludes to this point when it writes;
“So the other prong of attack is to find some preservation-minded angel with deep pockets who will buy it from the developer. Preferably today.”
Let’s not forget the Coase Lighthouse example. In a nation with 300 million citizens, will someone step up and use private funds to provide public goods and take this action solely due to self interest of enjoying owning a Wright House?
So, this Arizona case study provides a good test of how powerful are the 101 year old Coase’s ideas in the year 2012.
2012-10-04 02:44:54
Source: http://greeneconomics.blogspot.com/2012/10/the-coase-theorem-lighthouse-and-future.html
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