Property?

Diary Entry: January 20, 2025

I’m still stuck on this Coase problem. They will likely reject my presentation, as it seems incoherent even to me. I need to adjust my approach. If the “Coase Theorem” in chapters III and IV isn’t the main point, what is?

My mind keeps drifting back to my LLM. I took Property back in 2016-2017, and I remember we spent a lot of time on the modern theory of property. We learned that the old idea of property — that an owner has absolute, sole dominion over a physical thing — is outdated.The new theory, the one all the professors taught, is the “bundle of rights” theory. Property isn’t the land itself, but a “bundle of sticks.” The owner possesses certain sticks (like the right to use, the right to sell), but other sticks can belong to others — the government, a neighbor with an easement, etc.

I’m re-reading The Problem of Social Cost for what feels like the hundredth time, and suddenly... it’s everywhere.

Coase is talking about property. He’s not just talking about torts. He explicitly says that “what the land-owner in fact possesses is the right to carry out a circumscribed list of actions”. He criticizes the traditional view that a “factor of production” is a “physical entity” (like an acre of land) and says we should instead see it as “a right to perform certain (physical) actions”.

He even says the “right to do something which has a harmful effect (such as the creation of smoke...)” is also a factor of production.

This seems exactly like the “bundle of rights” theory. The right to make smoke is a “stick,” and the right to clean air is another “stick.” They’re just rights to be allocated. This seems to be the very core of his argument. This has to be part of the “misunderstood” analysis.

I got so excited that I emailed my property class professor. I asked him if the real point of Coase’s paper was actually a redefinition of property, moving away from physical ownership to this ‘bundle of rights’ concept.

His reply was blunt—Coase is not a property paper. But in the same breath, he mentioned he hasn't researched the topic or paid attention to it, so he can't be sure. How does that even work? But fine.

Interesting.

He shut me down so fast. But the text is right there. Coase’s own words are about redefining property. Why is everyone, including my professor, so insistent that this paper is not about property?

It’s very... interesting.