Demsetz Lecture on Coase and Externalities

by Shawn Regan

Last summer, PERC was fortunate enough to host Harold Demsetz, who gave a rousing lecture on Ronald Coase. The video of the lecture is now online and is entitled “Fallacies in the Economic Doctrine of Externalities.”


  1. Great lecture! Thanks for sharing it.

  2. I was surprised by Demsetz’s suggestion that Frank Knight’s “Fallacies … ” paper was not particularly influential (or well-known?) When I was in graduate school in the ’70s, we took the Knight paper (included in the “Readings in Welfare Economics” volume edited by Arrow and Scitovsky), very seriously. Later during my teaching career, I used the Knight “Two Roads” framework to explore the role of property rights / markets / competition in the internalization of costs.

    (Interestingly, we did not read Coase in my graduate school classes. But we did read “Externality,” by Buchanan and Stubblebine (Economica, 1962.) This paper teaches some of the same lessons as Coase.)