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The Sense in Coase's Critique of Pigou: The Ceteris Paribus Case for Intervention

Research output: Contribution to Journal/MagazineJournal articlepeer-review

<mark>Journal publication date</mark>1/01/2017
<mark>Journal</mark>Journal of Law, Economics and Policy
Issue number1
Number of pages16
Pages (from-to)39-54
Publication StatusPublished
<mark>Original language</mark>English


One of the most important contributions to the rethinking of our approach to regulation since the 1970s has been Ronald Coase’s critique of the welfare economics of intervention formulated by AC Pigou. Seeking to continue the revision of our evaluation of Coase’s critique, the leading historians of economic thought Roger Backhouse and Steven Medema have made an important contribution to regulatory theory by arguing that Coase did not give due credit to Pigou’s conception of the ‘prima facie case’ for intervention. This paper argues that Backhouse and Medema themselves give too much credit to what is substantially a rhetorical gesture which I have previously called ‘ceteris paribus reasoning’. Those conscious of the legal difficulties of regulatory design who seek to justify intervention, and indeed the welfare state, must now give more weight to Coase’s criticism.