How damaging are the facts to coase analysis

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Question: Social norms. Social norms often evolve to cope with external costs, without bargaining or law. For example, a social norm in a county in northern California requires that ranchers assume responsibility for controlling their cattle, even though parts of the county are "open range" (that is, areas in which legal responsibility rests with farmers). Furthermore, the ranchers and farmers in this county apparently do not engage in the kind of bargaining envisioned by the Coase Theorem. How damaging are these facts to Coase's analysis? Why would you expect neighbors in long-run relationships to adopt efficient norms to control externalities?

Reference no: EM131908856

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