I have been thinking a good deal about the problem of pollution in an
anarcho-capitalist society lately. It has lead to many quick dead ends,
but provided a few thoughts that I can't shut the door on, yet.
What about a private EPA(s)? They would be private environmental
regulatory agencies. This would help lower the trasaction costs and,
with private law establishing contracts of rights to pollute/not be
polluted on, this could help lead to a Coasian solution. The private
EPA would make money by offering a service of testing for environmental
degradation and then arbitrating with the polluters. It would be held
in check (i.e. not arbitrating for every little degredation) because
arbitration costs.
There may be many problems with this, but one that jumps out is the
question: Does the Coase Theorem apply to externalities that are public
bads/goods?
The theorem applies, but if the public is large the transactions costs are likely to be large too, so you may well fail to reach the efficient outcome.
I mean, while people could bargain for an optimal solution
IF tranaction costs were zero, would this happen for a public good?
Wouldn't there still be the freerider problem?
With zero transaction costs, if there is any inefficiency due to
a free rider--failure of production or production at below the
optimal quality--there is some deal that will eliminate the
inefficiency and allocate the gains in a way that makes all parties
better off.
Any thoughts?
Jason DeBacker
You will find a discussion of the underlying issue in
"Anarchy and Efficient Law," a chapter a contributed to the
book _For and Against the State_. The chapter is webbed at:
http://www.daviddfriedman.com/Academic/Anarchy_and_Eff_Law/Anarchy_and_Eff_Law.html
The most relevant section is titled
"Market Failure in the Market for Law."
--
David Friedman
Professor of Law
Santa Clara University
[EMAIL PROTECTED]
http://www.daviddfriedman.com/
David Friedman
Professor of Law
Santa Clara University
[EMAIL PROTECTED]
http://www.daviddfriedman.com/
