Political economy
Farshad Moameni; hojjatollah mirzaei; ali jafari shahrestani
Abstract
Before 1990th, in political economy theories, the security of property rights was to be presumed. The importance of property rights as the underlying factor of economic growth and economic development was first noticed by new institutional economists and then expanded. This paper studied the Marxist ...
Read More
Before 1990th, in political economy theories, the security of property rights was to be presumed. The importance of property rights as the underlying factor of economic growth and economic development was first noticed by new institutional economists and then expanded. This paper studied the Marxist and methodological individualism political economy approaches that have been used by researchers to describe the main reasons for the underdevelopment of Iran with a focus on property rights.The weakness of them all is inadvertence to Iranian historical features and failure to present an independent theory regarding the inefficiency of property rights in the history of Iran. Therefore, using the new institutional approach, which is based on historical studies and society institutions and using them in the analysis of the role of property rights on underdevelopment and not just studying the series of historical developments and geographical features, could be a facilitator. In this way, this paper suggests focusing on these features of Iran:1) Specific climatic conditions of Iran with the lack of water, which is the main reason for tension;2) The effect of climate conditions on political and economical systems (the government theory) and forming nomadism and tribal life and tribal governments;3) The effect of forming those political and economical system on property rights underdevelopment (the property rights theory).
Economic Development
mahya allahgholi; Farshad Moameni
Abstract
Considering the economic complexity index as a development index due to its greater estimation power in predicting economic growth and income inequality compared to similar indices, along with shortcomings such as the inability to express the difference in the complexity levels of economies, it makes ...
Read More
Considering the economic complexity index as a development index due to its greater estimation power in predicting economic growth and income inequality compared to similar indices, along with shortcomings such as the inability to express the difference in the complexity levels of economies, it makes the theoretical model to explain this index inevitable. In the social orders approach, the type of social order is mentioned as the difference between developed and developing economies, and in this article an attempt has been made to identified determinants of this index. In this study by descriptive analytical method the state of property rights, the business environment and the type of people`s access to organizations are known as three variables affecting this index. analyzing Iran`s economic complexity index during 10-period (2010-2020) and three indexes, international property rights, ease of doing business and economic freedom, respectively as an estimation of those variables, shows that the international property rights index has a stronger positive relationship with the economic complexity index than the other two indices.
Public sector economics
Ali Nassiri Aghdam
Abstract
The paper aims to reassess “the Coase Theorem” in its historical context and highlight the discernible gap between the Coase Theorem and the often-overlooked arguments articulated by Coase. In “the Problem of Social Costs”, Ronald Coase intended to emphasis on the irrelevance ...
Read More
The paper aims to reassess “the Coase Theorem” in its historical context and highlight the discernible gap between the Coase Theorem and the often-overlooked arguments articulated by Coase. In “the Problem of Social Costs”, Ronald Coase intended to emphasis on the irrelevance of Pigou's argument in dealing with externalities. The theorem implies that in a world with zero-transaction cost, external effects are internalized without government intervention and the allocation of legal rights does not matter. These implications have led observers to criticize the theorem, notwithstanding the accurate scrutiny reveals that almost all of the critiques center around the main assumption of the theorem – namely, zero transaction costs- rather than the theorem itself. While the correctness of the theorem heavily depends on the concept of “transaction costs”, the concept suffers from a lack of clear definition. It is important to note, in that paper, Coase intended to argue that Pigou's analysis in “the Economics of Welfare” is irrelevant, and in a zero-transaction cost world, market forces internalize externalities, and government intervention is not needed. In contrast, when positive transaction cost is considered the allocation of legal rights and liabilities becomes important. This latter point has been almost ignored in the literature and entailed that the Coase theorem is an unrealistic one. IntroductionCoase Theorem stands as a highly discussed and well-developed theorem in law and economics. The theorem received too much of critiques even before the publication of the Coase’s seminal paper. These hot debates made “the Problem of Social Costs” one of the most cited articles in Law and Economics. In this paper I am going to reconsider the theorem in its historical context and highlight the discernible gap between the Coase Theorem and the often-overlooked arguments articulated by Coase in the aforementioned article.Methods and MaterialTo conduct the research, I adopted the library and document research method. To do so, I thoroughly reviewed Coase’s methodological background and highlighted his consequentialist mind as well as his approach to externalities and rejection of Pigouvian liability and taxation rules. Furthermore, I analyzed critiques of the Coase Theorem and discussed why the theorem has remained robust against those attacks. Finally, I argued why the Coase theorem is a misunderstanding of Coase’s approach to real economy and should be interpreted as the departure point of his theoretical approach to real economy.Results and DiscussionAnalyzing nuisance and externalities, respectively in legal and economic literature was at the core of the Coase’s discussion in “the Problem of Social Costs”. At the time, the dominant legal approach to delineate liability was fault based. The Pigouvian solution to internalize externalities had been developed based on this legal tradition. Based on Pigou, taxes have to be employed to motivate polluters or injurers to take into account the costs they impose on others without compensating them.Coase, first of all, intended to undermine these legal and economic approaches to liability and nuisance. He developed, in that paper, his consequentialist approach to law, based on which alternative liability rules should be assessed in terms of their consequences, and the adopted rule should entail higher total net benefit. This was evident in his opening discussion in which he mentions the case of Sturges vs. Bridgman.In addition, he highlights the role of property rights in performing economies as well as the power of markets in exchanging legal rights and allocating them to the parties who value the rights higher than other parties. He made this clear when he assigned legal rights to farmer and herder alternatively and concluded that the resulting property right is efficient and invariant, regardless of the initial holder of the legal right. This argument named by George Stigler, The Coase Theorem.In this approach, not only markets are considered as a mechanism which is capable to allocate rights efficiently but also what are exchanged in markets are considered as bundles of rights rather than mere physical goods and services. He emphasized on this critical point at the concluding part of the paper.Among these and other exciting issues, what absorbed most attentions was the Coase Theorem and even most of the critics allocated their time and effort to undermine the Theorem, while the Theorem was only the departure point of his arguments. In the first half of the paper, maybe under the influence of the Black Stone Avenue’s discussions, he considered the case in which costs of using price mechanism is zero and argued that in such a world, market exchanges would internalize externalities, government intervention is not required, Pigouvian taxes are irrelevant, and the allocation of legal rights does not matter.In this paper, I discussed alternative critiques of the Coase Theorem and indicated that almost all of them, in fact, argue that in a non-zero transaction costs world the theorem does not hold. This is why these critiques are, in effect, the proof of the theorem rather than its refutation. As a matter of fact, the Coase Theorem is a development of the first fundamental theorem of welfare economics, and both of them are valid in a zero transaction costs world.ConclusionAs indicated, Coase’s main argument is different from the Coase Theorem. While the latter underscores the irrelevance of legal rules, the former highlights the importance of legal rules in real world, in which transaction costs are positive. In this world, reducing transaction costs by defining legal rights is efficiency enhancing (normative Coase Theorem). Furthermore, Legal rights should be chosen based on their merits in economizing exchanges and supporting arrangements with higher total net benefits. This is the main mission of the law and economics.
