Economist Ronald Coase passed away September 2 at age 102. His influence on the discipline is immeasurable. He had co-authored his last book, How China became Capitalist, just last year.
Coase's most famous paper, "The Problem of Social Cost" in 1960, dealt with "externalities," or economic costs (say, downstream pollution) that are used to justify some tax or regulation. Coase showed there may be better ways to address those costs, especially if property rights are well defined. The right to perform certain actions, when properly protected by the law, can be priced and traded like any other good. If transaction costs are low, firms and individuals can bargain their way to a mutually beneficial outcome without litigation, taxation or coercive regulation.
Read the complete article at The Wall Street Journal.