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Coasian Contracts in the Coeur d’Alene Mining District
By Robert Higgs
This article appeared in the Fall 2012 issue of The Independent Review


Abstract

Located in the Idaho panhandle, the Coeur d’Alene mining district has the largest recorded silver production in the world. Its early history is rich with examples of how, in the absence of government regulations and mitigation taxes, private parties negotiated contracts that greatly reduced the spillover costs associated with mining and milling minerals.


Article

For the greater part of the twentieth century, mainstream economists viewed negative (technological) externalities as a prima facie justification for government intervention in the market. Absent such government action, they argued, nothing would be done to prevent or remedy the damages third parties suffered as a result of unrestrained “spillovers” or “neighborhood effects.” For example, in the words of Joseph E. Stiglitz, “without government intervention there would be an underprovision of pollution control” (1988, 76). Even such staunch defenders of the market as Milton Friedman (1962, 30) and F. A. Hayek (1979, 43–45) conceded that spillovers might justify government intervention, although they embraced neither the “blackboard economics” conclusion that government intervention is desirable and effective in all cases of spillovers nor the “nirvana” standard implicit in Stiglitz’s use of the neoclassical welfare-economics term underprovision....



Other Independent Review articles by Robert Higgs
    Spring 2014   The Salmon Trap: An Analogy for People’s Entrapment by the State
    Winter 2014   Worrisome Changes in U.S. Labor Force and Employment since 2007
    Fall 2013   The Sluggish Recovery of Real Net Domestic Private Business Investment
[View All (45)]


Volume 17 Number 2
Fall 2012

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