Economics of Natural Resources for Social Cost- myassignmenthelp

Question: Discuss about theEconomics of Natural Resources for Social Cost. Answer: The Problem of Social Cost is one of the most cited law review journal, published back in 1960 by the Ronald Coase (hirley et al., 2015). This article was rather a critical evaluation of externality, than a mere evolution of economic front of the same utilising mathematic tools. The article published by R. Coase is one of the foundations of law and economic, which has transformed the prevailing neo classical idea of efficient resource allocation to a new dimension. This essay is aimed to provide a critical analysis of the Problem of Social Cost article published by R Coase and through this analysis; it will highlight the various findings of the Coase. Coase rationalizes the emergence of a decentralized, privately owned, competitive ownership economy where he sets and modifies the economic system conditions compared to the prevailing ideas of resource allocation. A decentralization economy assumes that everyone is aware of all prices that are critical for firms decision making, which means that the cost of acquiring this information is nil (Atkinson Stiglitz, 2015) Coase sight this conjecture as a hypothesis that pricing is free for all parties in the case of market usage, however, he advocated that resources are required in the creation and maintenance of a price system. Additionally, Coase augments the neoclassical model. The neoclassical model is seen to assume that personal possession is attached to all per capita and the contracts of purchase stand, which results in free pricing system; however it can never be the case. As a result, Coases model that uses one specific transaction cost helps augmentation of the neoclassical model through emphasizing on an actual cost of ownership in addition to one fixed transaction cost (Buldyrev et al., 2016). It is worth to note that Coases view on transaction price in The issue of the Social Cost is different to his earlier view in the 1959 article The Confederate Communications Commission (Aivazian Callen1, 2017). Coase further uses transaction cost to show how externality cannot occur in a neo-classical sphere where markets and price knowledge is free to every market player. He asserts that a globe without business cost not possible. However, this idea is limited, since if it is assumed that transaction costs are zero, then it would mean that the ideal decentralization copy results in a systematic allotment of resources (Campbell, 2017). Coases model presumes the costs of producing goods and services are positive. Therefore, if these costs do not end up limiting the deduction of planning then there is no reason for limiting the addition of one additional service. From analysing the article of Coase, it can be stated that, According to Coases argument, there exists a difference between transaction cost and other costs (Allen, 2015). This difference in the cost result to inefficiency in resource allocation, which leads Coase to introduce positive transaction cost while contradicting the Pigous idea of efficient resource allocation. To conclude it can be stated that through introduction of positive transaction, Coase has provided a new horizon for further research regarding the allocation of resources and externality that contradicts the previous existing ideas of resource allocation. Reference: Allen, D. W. (2015). The Coase theorem: coherent, logical, and not disproved.Journal of Institutional Economics,11(2), 379-390. Atkinson, A. B., Stiglitz, J. E. (2015).Lectures on public economics. Princeton University Press. Buldyrev, S. V., Salinger, M. A., Stanley, H. E. (2016). A statistical physics implementation of Coase? s theory of the firm.Research in Economics,70(4), 536-557. Campbell, D. (2017). The Sense in Coase's Criticism of Pigou: The Ceteris Paribus Case for Intervention.JL Econ. Pol'y,13, 39. Shirley, M. M., Wang, N., Menard, C. (2015). Ronald Coase's impact on economics.Journal of Institutional Economics,11(2), 227-244.