In his pioneering work on transaction costs, Ronald Coase presupposed a picture of property as a bundle of government-prescribed use rights. Not only is this picture not essential to Coase's purpose, but its limitations emerge when we apply Coase's central insights to analyze the structure of property itself. This leads to the Coase corollary: in a world of zero transaction costs, the nature of properly does not matter to allocative efficiency. However, as with the Coase theorem, the real implication is for our world of positive transaction costs: we need to subject the notion of property to a comparative institutional analysis. Because transaction costs are positive, properly is initially defined in terms of things, uses are grouped under exclusion rights, and in rem rights are widely employed. A more thoroughly Coasean approach points back to a picture of properly more like the traditional one furnished by the law.
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