Money Stuff: You Can Sell the Trees You Don’t Cut

I love this stuff:

One reason to love it is as a story about the Coase theorem. The Coase theorem says that if a timberland owner can make $15 by cutting down her trees, but cutting her trees would cause $20 worth of harm to her next-door neighbor — because the neighbor would miss the view, or the cooling shade of the trees, or the carbon capture — then they should be able to strike a bargain. The neighbor can pay the landowner $17 not to cut the trees; then the landowner is $2 better off than if she had cut the trees (she has $17 instead of $15), and the neighbor is $3 better off (she loses $17 instead of $20). The outcome — not cutting the trees — will be the socially optimal outcome, the one that maximizes overall well-being, rather than the property owner’s simplistically selfish outcome.