The Importance of Secure Property Rights

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The lowest cost ways of dealing with these things would emerge. People are secure in their property rights, and they can exchange those properties. They have incentives to either exchange them if they can, or to take steps to minimize the damage to them. You don't need a top down regulator saying, do this or do that. And when we recognize that all harm is mutual, ah, then it's easier to recognize that the appropriate adjustment may not be obvious.

Don Boudreaux of George Mason University and Cafe Hayek talks with EconTalk host Russ Roberts about the intellectual legacy of Ronald Coase. The conversation centers on Coase's four most important academic articles. Most of the discussion is on two of those articles, "The Nature of the Firm," which continues to influence how economists think of firms and transaction costs, and "The Problem of Social Cost," Coase's pathbreaking work on externalities.