Coase and the Economics of Crime

“The problem of social cost” is a major piece of Coase’s legacy. It constitutes the foundation of the neo-institutionalism movement. This article tries to provide a solution to situations characterized by disputes on the use of resources. We propose a libertarian and Rothbardian re-examination. In the first section, the Coase theorem is the object of a personal appraisal. The second section stresses the common points between the Coasian approach and the classical school of the economics of crime. The third section examines the consequences of both of these theories for public policy. ∗ Researcher at the French National Institute for Transport and Safety Research. He works for the GARIG department. He is also an associated researcher of the LAEP department of the University of Paris 1. A first version of this paper was delivered during the Austrian Scholars Conference in Auburn (Alabama), March 2004 for a session on Law and Economics with Walter Block, Peter Klein and Roy Cordato. The author would like to thank Nicolai Gertchev for his precious comments. The usual caveat applies. 2 New Perspectives on Political Economy