Coase and the Constitution: A New Approach to Federalism

This paper proposes a new approach to the centuries-old question of federalism. In a word, we approach the problem offederalism from a Coasian or property-rights perspective. That is, instead of attempting to draw an arbitrary boundary line between state and federal spheres of power through traditional legal or semantic analysis of the constitution and previous judicial precedents, this paper proposes the creation of alternative \u27federalism markets in which governmental powers and functions would be allocated to Congress, the states, or even private firms through decentralized auction mechanisms and secondary markets. The paper is divided into five parts. Following a brief introduction, part two models existing federal-state disputes as a game of chicken and provides a brief theoretical outline of our alternative approach. Next, part three develops a simple two-part model of federalism markets, specifically, the use of auctions as well as secondary markets for the allocation of state-federal powers. Part four reviews and refutes some salient technical and philosophical objections to our proposed system offederalism markets, while part five concludes

Coase and the Constitution: A New Approach to Federalism

This paper proposes a new approach to the centuries-old question of federalism. In a word, we approach the problem offederalism from a Coasian or property-rights perspective. That is, instead of attempting to draw an arbitrary boundary line between state and federal spheres of power through traditional legal or semantic analysis of the constitution and previous judicial precedents, this paper proposes the creation of alternative \u27federalism markets in which governmental powers and functions would be allocated to Congress, the states, or even private firms through decentralized auction mechanisms and secondary markets. The paper is divided into five parts. Following a brief introduction, part two models existing federal-state disputes as a game of chicken and provides a brief theoretical outline of our alternative approach. Next, part three develops a simple two-part model of federalism markets, specifically, the use of auctions as well as secondary markets for the allocation of state-federal powers. Part four reviews and refutes some salient technical and philosophical objections to our proposed system offederalism markets, while part five concludes

Modelling the Coase Theorem

More than fifty years ago Ronald Coase published ‘The Problem of Social Cost’. In his paper, Professor Coase presents an intriguing idea that has since become known among economists and lawyers as the ‘Coase Theorem’. Unlike most modern forms of economic analysis, however, Coase’s Theorem is based on a verbal argument and is almost always proved arithmetically. That is to say, the Coase Theorem is not really a theorem in the formal or mathematical sense of the word. Our objective in this paper, then, is to remedy this deficiency by formalizing the logic of the Coase Theorem. In summary, we combine Coase’s intuitive insights with the formal methods of game theory

Coase’s Parable

Some stories have heroes and villains. Others involve a voyage, a quest, or a monster to be defeated. The law is no exception. Most legal stories are about identifying wrongdoers and vindicating the rights of victims, and this standard victim-wrongdoer model not only informs recent developments in legal scholarship, such as feminist jurisprudence or critical race theory; it also informs our classical liberal tradition.5 But what if harms are reciprocal or jointly caused? In other words, what if victims are just as responsible as wrongdoers for their plight