The Coase Theorem, the Lighthouse and the Future of a Frank Lloyd Wright House in Arizona
A funky Frank Lloyd Wright house may be demolished in Arizona. The owner of the property is free to choose to do what he/she wants with her property. Historic Preservation laws do not apply in Arizona but the Coase theorem would predict that a Wright Home is a public good and those who would lose from its destruction should band together if they face low transaction costs and can overcome free riding to make a bid to purchase and preserve the private property. The NY Times alludes to this point when it writes;
"So the other prong of attack is to find some preservation-minded angel with deep pockets who will buy it from the developer. Preferably today."
Let's not forget the Coase Lighthouse example. In a nation with 300 million citizens, will someone step up and use private funds to provide public goods and take this action solely due to self interest of enjoying owning a Wright House?
So, this Arizona case study provides a good test of how powerful are the 101 year old Coase's ideas in the year 2012.
"So the other prong of attack is to find some preservation-minded angel with deep pockets who will buy it from the developer. Preferably today."
Let's not forget the Coase Lighthouse example. In a nation with 300 million citizens, will someone step up and use private funds to provide public goods and take this action solely due to self interest of enjoying owning a Wright House?
So, this Arizona case study provides a good test of how powerful are the 101 year old Coase's ideas in the year 2012.


2 Comments:
I enjoyed reading your this informative article and considering the points you made. You make a lot of sense. This is an excellent piece of writing. Thanks for sharing this so we can all read it.
Webzemini Software - Software Company
My professor said on the class today:
I am always thinking why computers are becoming better and better while our neighborhood allies are getting worse and worse. Then I came up that public goods are hard to produce!
I really like that notion.
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