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70 Tul. L. Rev. 2565 (1995-1996)
Silicone Breast Implant Litigation and My Father-In-Law: A Neo-Coasean Analysis

handle is hein.journals/tulr70 and id is 2601 raw text is: Silicone Breast Implant Litigation and My Father-in-Law: A Neo-Coasean Analysis Daniel Q. Posin The Coase Theorem holds that in the absence of transaction costs, the change in the liability rule does not affect the allocation of resources. In an earlier article, The Coase Theorem: Through a Glass Darkly, 61 Tennessee Law Review 797-868 (1994), the author demonstrated the error of the Coase Theorem. The present Essay applies those ideas to the issues surrounding silicone breast implant litigation and the problems the authorsfather-in- law has had with obtaining a silicone prosthesis for his thumb. The Coase Theorem is wrong because it is founded on marginal analysis whereas, as explained in this Essay, the relevant analysis is rate of return. The author shows that even in the absence of transaction costs, a shift in legal liability does change the allocation of resources. As an example of this. between the time the author's father-in-law first obtained a silicone prosthetic device for his injured thumb in 1985 and the time he needed a replacement device in 1995, legal liability for silicone devices had shified markedly against the manufacturers of all such devices. As a result, contrary to the Coase Theorem, allocation of resources did change. The author's father-in-law was unable to get the same silicone device in 1995 that he was able to get in 1985. IL BACKGROUND ........................................................................... 2566 A. My Father-in-Law ............................................................ 2566 B. Silicone Breast Implant Litigation .................................. 2567 If. THE COASE THEOREM ............................................................... 2573 A. Introduction ...................................................................... 2573 B. The Error of the Coase Theorem ..................................... 2575 III. APPLICAION OF THE ANALYSIS ................................................ 2579 A. The Coase Theorem is Disproven as an Empirical M atter ............................................................................... 2579 B. The Coase Theorem is Disproven as a Theoretical M atter ............................................................................... 2581 IV. D EDICATION ............................................................................... 2582 * Professor of Law, Tulane Law School. Copyright© 1996 Daniel Q. Posin. This Essay will be presented at the Annual Conference of the Society for the Advancement of Socio-Economics at the University of Geneva in Geneva, Switzerland, on July 12, 1996. 2565

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