Alex Atanasov (Applied Science University) has posted The Puzzle of Failed Coasean Bargaining: Operational Guidance and Institutional Coordination on SSRN. Here is the abstract:
This article asks why Coasean bargaining fails in settings where it appears most likely to succeed. It develops this question through Kerr v. Revelstoke Building Materials Ltd., a Canadian nuisance dispute involving a forestry mill and a neighbouring motel that closely approximated Coase’s canonical bilateral externality: identifiable parties, observable harm, repeated interaction, and formally protected land interests. Yet no bargain emerged. The parties moved from complaints, to unilateral mitigation, to business closure, and finally to litigation. The article argues that the missing condition was not information, communication, or legal rights as such, but operational guidance: institutional information sufficiently clear, timely, accessible, authoritative, and predictable to enable actors to decide how to adapt their behaviour before loss becomes irreversible. Building on Coase, North, Williamson, Ellickson, the “shadow of the law” literature, and Fuller, the article develops a framework in which institutions coordinate by transforming conflict-related information into operational guidance. Where that guidance is weak, decision costs remain high, adaptation remains unilateral, and voluntary coordination fails. Kerr therefore shows that clearly defined property ownership is not equivalent to practically usable legal guidance. The article does not reject Coasean analysis; it refines the institutional conditions under which Coasean bargaining becomes viable. Its broader contribution is to propose operational guidance as a common evaluative criterion for comparing social norms, bargaining, trial courts, appellate courts, and other coordination institutions.
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