1.) Discuss the similarities and differences between rights such as the rights to free speech and rights such as the right to own a home or business. How would the right to an education or the right to be free from hunger fit into you categorization of rights?

Freedom of speech means freedom from interference, suppression or punitive action by the government—and nothing else. It does not mean the right to demand the financial support or the material means to express your views at the expense of other men who may not wish to support you. Freedom of speech includes the freedom not to agree, not to listen and not to support one’s own antagonists. A “right” does not include the material implementation of that right by other men; it includes only the freedom to earn that implementation by one’s own effort. Private citizens cannot use physical force or coercion; they cannot censor or suppress anyone’s views or publications.

Everyone has the right to own property alone as well as in association with others.. No one shall be arbitrarily deprived of his property. The right to property, is often classified as ahuman right fornatural persons regarding their possessions

For your own business, it will be up to you to manage your time, plan, and oversee projects. You’ll need to set deadlines and schedules for yourself—and possibly even for other employees. You’ll have to follow up with when you own a business; you’re responsible for making all the decisions. Some require quick response, while others require reflection. Not only do you need decision-making skills in both areas, but also you need to be able to tell when a decision should rebe quick or reflective. Subcontractors, or others with whom you deal. When you own a business, you’re responsible for making all the decisions. Some require quick response, while others require reflection. Not only do you need decision-making skills in both areas, but also you need to be able to tell when a decision should be quick or reflective.


2.) During the 1800’s in the American West, cattle were being consumed in large quantities than Buffalo, yet buffalo were hunted nearly to extinction while the population of cattle grew. Explain how these facts reconciled.


How about 60 million breeding bison “shot off” in the late 1800s? That makes 30,000 passenger pigeons felled to pellets in a single afternoon plausible by comparison. And yet even we hunters have bought into the lie. We even apologize to anti-hunters for our ancestors. It never happened. Buffalo ranged over a vast domain with not a single legitimate road and few trails. The herds covered Nebraska, Wyoming, North and South Dakota, Oregon, Washington—don’t forget Texas-—and the provinces of Alberta and Saskatchewan. How about Montana? Montana alone comprises 147,138 square miles. Wyoming, Idaho, and Oregon combine for 425,590 square miles.

Picture the professional hunter, or “buffalo runner,” as he preferred, on foot or horseback, wagon in tow with two to three skinners. The pros preferredSharps andRemington Rolling Blocks, some scoped, more iron sighted. Singleshots, not machine guns. And no helicopter gunships. Blackpowder caked the bore, sometimes cleared by a urine flood. How many bison could a skinner skin in one day? A modest-sized cow ran 1,500 pounds on the hoof, her sire going a ton and more. Does the folly begin to take form? Tell a lie often enough, especially in print, and fabrication outruns truth and logic.

This is no whitewash job. The American buffalo (bison) was not shot off, because it could not be rendered extinct by bullets due to incredible numbers, vast and often unreachable habitat, primitive travel methods, and inferior firepower. Capt. William Twining, the surveyor who established the border between Canada and Montana, stood on a hill and watched a migrating herd so large that he could not determine beginning or end. Total bison numbers were beyond comprehension. Respected naturalist Ernest Thompson Seton did his best to calculate the possible number of roaming bison at 60 million, which is agreed upon today by most experts as a reliable figure.

The buffalo was shot for profit and “sport,” but also for calculated governmental design. Cy Martin wrote in The Saga of the Buffalo that Congress in 1870 debated abandoning direct conflict with the intrepid red warriors of the plains. Tetonka, the buffalo, provided meat eaten raw, cooked, and dried; great warm robes against cold; hides for tipis and clothing; bones for tools; sinew for sewing and bowstrings; fletching glue from hooves; brains for tanning; bladders to hold water; bone marrow for vitamins; tallow for medicine; skulls for worship; and scrotums for lead shot bags.

3.) What is Coase Theorem? Under what conditions does the Coase theorem apply?

Coase theorem is a legal and economic theory that affirms that where there are complete competitive markets with no transactions costs, an efficient set of inputs and outputs to and from production-optimal distribution will be selected, regardless of how property rights are divided. Coase theorem asserts that when property rights are involved, parties naturally gravitate toward the most efficient and mutually beneficial outcome. 

The Coase theorem states that where there is a conflict of property rights, the involved parties can bargain or negotiate terms that are more beneficial to both parties than the outcome of any assigned property rights. The theorem also asserts that in order for this to occur, bargaining must be costless; if there are costs associated with bargaining (such as meetings or enforcement), it will affect the outcome. The Coase theorem shows that where property rights are concerned, involved parties do not necessarily consider how the property rights are granted if they can trade to produce a mutually advantageous outcome. 
This theorem was developed by Ronald Coase when considering the regulation of radio frequencies. He posited that regulating frequencies was not required because stations with the most to gain by broadcasting on a particular frequency would have an incentive to pay other broadcasters not to interfere.

4.) Give some example of transactions cost in private markets. How do they inhibit the efficient use of resources? Can you suggest any ways in which these transactions costs might be lowered?


Imagine a farm and a ranch next to each other. The rancher’s cows occasionally wander over to the farm and damage the farmer’s crops. The farmer has an incentive to bargain with the rancher to find a more efficient solution. If it is more efficient to prevent cattle trampling a farmer’s field by fencing in the farm, rather than fencing in the cattle, the outcome of the bargaining will be the fence around the farm.

Take another example. The Jones family plants pear trees on their property which is adjacent to the Smith family. The Smith family gets an external benefit from the Jones family’s pear trees because they pick up the pears that fall on the ground on their side of the property line (see ). This is an externality because the Smith family does not pay the Jones family for the utility received from gathering fallen pears. As a result, the Jones family plants too few pear trees. In response, the Jones family can put up a net that will prevent pears from falling on the Smith’s side of the property line, eliminating the externality. Alternatively, the Jones could impose a cost on the Smith family if they want to continue to enjoy the pears from the pear trees. Both parties will be better off if they can agree to the second scenario, as the Smith family will continue to enjoy pears and the Jones family can increase the production of pears.

5.) Why are transactions costs important in assesing the appropiate public? policy for dealing with a poorly defined property right? Exactly what is meant by transactions costs in this context? What factors will affect the level of transaction costs?


There are at least three main factors underlying positive transaction costs. First, individuals are limited in their ability to plan for the future and in spite of their best efforts to deal with the complexity and unpredictability of the world around them, they lack the knowledge, foresight and/or skill to accurately predict and plan for all the various contingencies that may arise. Second, even if perfect planning were possible, it is hard for contracting parties to negotiate about these plans due to the difficulty associated with developing a common language to describe actions and states of the world with which the parties have little prior experience. Third, assuming that parties could plan and negotiate for a fully contingent contract, it frequently remains difficult for them to communicate their plans in such a way that an uninformed third-party (e.g., a court) could reasonably enforce them. The upshot is that all contracts are actually and effectively incomplete. One economic implication of contractual incompleteness is that when circumstances arise that were not accounted for in the original agreement, parties must partake in costly renegotiations and may engage in excessive haggling over how to revise the contractual terms. Particularly problematic are calculated efforts on the part of individuals to mislead, renege, cheat or otherwise take advantage of the vulnerabilities of their trading partners in hopes of achieving a more favorable distribution of the rents accruing to exchange. Although not everyone is so Macher and Richman 4 inclined, the bounded rationality conditions outlined above make it difficult to uncover untrustworthy individuals. To safeguard against such opportunistic behavior, parties select institutional arrangements so as to mitigate the expected total cost of consummating the transactions involved. The governance structures that firms employ to guard against these contracting hazards vary in discrete structural ways with reference to their adaptive performance by reasons of differences in incentive intensity, administrative controls and contract law regime. Market forms of organization rely on prices to signal opportunities for autonomous adaptation to changing conditions in order to exploit new profit opportunities. As specialized or relationship specific investments increase, coordinated adaptation becomes more important. The movement from market to hierarchy entails trading off high-powered incentives and autonomous adaptive properties for the added safeguards and centralized coordinating properties of internal organization. Different governance forms, such as markets, hybrids, firms and bureaus, etc., are never examined alone but always in relation to one another. Identifying and explicating the syndromes of attributes that define each generic mode of governance are central to the exercise. The transaction is named as the basic unit of analysis and the critical dimensions to which transactions differ are also identified and the ramifications worked out. The logic of discriminating alignment—according to which “transactions, which differ in their attributes, are aligned with governance structures, which differ in their cost and competence, so as to effect a transaction cost economizing result” is then employed to derive refutable implications. A final assumption underlying transaction cost economics is that important dimensions along which transactions differ can be identified and measured,8 qualitatively if not quantitatively.

6.) Describe the common pool problem. Give some examples and suggest how solutions might be worked out to allocate resources more efficiently.

As the WCED noted in its report, “the traditional forms of national sovereignty are increasingly challenged by the realities of ecological and economic dependence. Nowhere is this truer than in shared ecosystems in ‘the global commons.’”Yet the WCED, headed by then–Norwegian Prime Minister Gro Harlem Brundtland, challenged scholars, public officials, and citizens to recognize that we all share a common future. That future is severely threatened, however, if we do not focus on how to protect our common heritage while endeavoring to achieve greater economic returns for the peoples of the world. The WCED conceived “environment” as where people live, and “development” as how people try to improve their lives.

A few years later, from 2001–2005, the Millennium Ecosystem Assessment (MEA) conducted a massive review of the state of the world’s ecosystems and their services. 7Their first major finding was that the change to ecosystems during the past half-century has been more rapid than any comparable period in human history.
Thus, the most recent worldwide review of our common future warned that major changes threatened our future. The MEA also advised that policymakers search for solutions for specific niches rather than generalized problems and avoid standardized so

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