A note on coase versus pigou: institutionalism versus interventionism

A sharp distinction can be observed between A. C. Pigou and R. Coase regarding the solution of externality problems. Pigou advocated government intervention to solve externality problems whereas Coase remained sceptical about the efficiency and efficacy of intervention procedures and mechanisms. However, a much broader perspective should be adopted and the significance of different elements and building blocks of the scientific work of both authors has to be included in the analysis. This note attempts to concentrate on the existing differences between A. C. Pigou and R. Coase, by relying upon the original contributions of these authors. As a result of the observed divergence between both theories, a focus on the difference between institutionalism and interventionism is instrumental to this article.