Guido Calabresi's economic analysis of law, Coase and the Coase theorem

Abstract

Calabresi and Coase, two of the founding fathers of the “law and economics” movement are frequently, and paradoxically, put on the same footing for having put forward the same results. The purpose of this paper is to investigate this proximity by analyzing Calabresi's works published in the 1960s. The argument we develop is that differences, and similarities, are deeper than what is usually assumed. First, methodologically, it can be said that Calabresi envisaged an economic analysis of liability rules while Coase adopted a law and economics perspective. Then, analytically, it can be shown that Calabresi proposed an “invariance” thesis. We compare it to Coase's results and to Stigler's Coase theorem and show that the “invariance” thesis can indeed be found in Coase's “The Problem of Social Cost” but was absent from Stigler's version of the Coase theorem—that was restricted to an “efficiency” thesis. We also show that Calabresi moved from the “invariance” to the “efficiency” thesis when he established a “Coase axiom”. However, Calabresi, just like Coase and Stigler, but for different reasons, believed that the axiom is theoretically valid but “in fact inaccurate”.