5 Crit 1 (2012)
The Problem of Blackmail: A Critique of Coase, and the Case for Blackmail Markets

handle is hein.journals/tcrit5 and id is 22 raw text is: THE PROBLEM OF BLACKMAIL: A CRITIQUE OF COASE, AND THE CASE
FOR BLACKMAIL MARKETS
F.E. GUERRA-PUJOL1
Treason doth never prosper, what's the reason? For if it prosper, none dare call it treason.2
Practices indistinguishable from blackmail, although not called by that name, are permitted in
areas of conduct where the law is enforced privately rather than publicly.3
INTRODUCTION
Although the epigram quoted above refers to the high crime of treason, it applies
equally to the problem of blackmail, for while there are few reported cases of blackmail
on the law books, the problem of blackmail is far more common than most commentators
are willing to concede. In fact, blackmail-broadly defined as a transfer of resources
from A to B in return for B's not carrying out a threat -is part and parcel of the process
of exchange. But it is precisely because blackmail, thus defined, is so common that none
dare call it blackmail.4 Although there is extensive literature on the law of blackmail, in
this paper, we take a non-normative approach to the problem of blackmail. First, we
argue that blackmail is fundamentally a problem of bilateral monopoly: just as the victim
must deal with blackmailer, the blackmailer must deal with the victim. Next, we explain
why the problem of blackmail is reciprocal [in] nature.6 Lastly, we propose the creation
of blackmail markets for the acquisition and transfer of legal rights to secrets.
1 Associate Professor, Barry University Dwayne 0. Andreas School of Law. The author is sincerely
grateful to Professor Lee Benham for bringing Coase's 1987 lecture to his attention during the 2005 Ronald
Coase Workshop in Barcelona, Spain. In addition, thanks to Salvador Antonetti, Elodie Bertrand, and
Carlitos del Valle for helpful comments on a previous draft of this paper.
2 THE OXFORD DICTIONARY OF QUOTATIONs 362 (Elizabeth Knowles ed., Oxford University Press
1999) (1991) (quoting John Harrington).
3 Richard A. Posner et al., Salvors, Finders, Good Samaritans, and Other Rescuers: An Economic
Study ofLaw and Altruism, 7 J. LEGAL STUD. 83, 83-128 (1978).
See, e.g., MIKE HEPWORTH, BLACKMAIL: PUBLICITY AND SECRECY IN EVERYDAY LIFE 20 (Routledge
& Kegan Paul) (1975).
See, e.g., Walter Block, The Legalization of Blackmail: A Reply to Professor Gordon, 30 SETON
HALL L. REV. 1182, 1182-1223 (2000).
' Ronald H. Coase, The Problem ofSocial Cost, 3 J.L. & EcoN. 1, 1-2 (1960).

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