[TBurette]

I didn't know about the Coase Theorem. The link between property right, transaction cost and externalities is not obvious and interesting.

We could imagine many tech examples similar to the school and highway :

- An ISP provides a connection with poor delay/jitter and it creates problem for software developers (Skype, multiplayer games,...) --> should the ISP compensate the developers or the developers pay the ISP to fix the problem?

- A developer is selling created a program that degrades the performance of another program if they are both run simultaneously. Who should pay who to compensate/fix the problem?

[mediumdeviation]

Coase Theorem doesn’t say _how_ you should divide up property rights - that’s a normative statement that’s outside the scope of economics - but rather that as long as _any_ property rights are assigned, regardless of which way the assignment goes, the outcome will be economically efficient.

Also it assumes transaction costs are negligible, ie in the example in the article, the negotiations between the railway and the farmer can be done cheaply and quickly. This is somewhat like assuming a frictionless plane in physics.