Sunday, August 25, 2013

What would Coase do?

Here is an excerpt from a story Real Sports recently ran about Donald Trump's lawsuit against Scotland. He wants to block the construction of windmills in the North Sea just off the coast of a golf resort he is building. He worries that the windmills will ruin the view from the course he has already build, and from the luxury homes and hotel he plans to build.

The ruling may hinge on who owns the property rights to the view. To explore the Coase Theory, an instructor could ask students what market transactions would be mutually beneficial in each case if transactions costs are low.  

An interesting sidebar is that the residents near the golf course initially opposed Trump's plans because the course would destroy the pristine beauty of the area.

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