Alex Tabarrok, Marginal Revolution, Coase and Spectrum Auctions, here. The Chicago dinner is pretty good.
The Coase theorem was first presented by Coase in his 1959 work on the FCC and allocating radio spectrum (jstor). Radio stations interfered with one another (i.e. externalities). Yet Coase argued that with well-defined property rights, spectrum could be allocated in a market just like other goods. In this talk from our MRUniversity course, Economics of the Media, I discuss spectrum allocation, Coase’s triumph at the Chicago dinner and the much longer time to acceptance and application in the real world of the FCC and spectrum auctions.
Paul Murphy, FT Alphaville, A peek into the swaps swamp, here. You don’t have this problem with central clearing, as these folks are not your counterparty. Market could shrink though.
Yes, of the 30,169 cases of potential mis-selling of interest rates hedges to gullible British businesses, a sum total of 10 cases have so far been settled. The bill to date is £500,000, but there’ll be a few zeros added to that figure before we’re through.
Unlike the payment protection scam involving retail customers, the swap cases are complex. The banks have had to take on 2,800 staff to work through claims and the review only got underway in earnest in May. Offers to businesses should now be flowing rapidly.