On 2 September 2013, one of the great economists of the 20th Century, Ronald Coase, passed away. Coase is particularly remembered for two seminal contributions to economics:
The transaction cost theory of the firm, which states that firms exist because a hierarchical system of organisation has lower costs than relying on the market to co-ordinate production.
The Coase Theorem, which effectively states that absent transaction costs when there are well defined property rights, the distribution of those property rights has no effect on production. By direct implication the only effect of regulatory intervention is the redistribution of wealth; it does not affect production. In later years Coase described this result as “an obvious point”: “all [the theorem] says is that people will use resources in the way that produces most value”.1