Ronald Coase and Frank Knight

Thus far this past week, we have attempted to trace the intellectual origins of Ronald Coase’s counter-intuitive idea of reciprocal harms to his undergraduate years at the London School of Economics (see here and here), but as I asked at the end of my previous post, what if the English economist had developed his model of reciprocal harms after his undergraduate years at the LSE? More specifically, another possible catalyst of Coase’s reciprocal-harm axiom is Chicago economist Frank H. Knight (pictured below), especially his paper “Some Fallacies in the Interpretation of Social Cost” (Knight 1924, 1952), which was first published in the Quarterly Journal of Economics in 1924. Although it is unlikely that Coase would have read Knight’s 1924 paper as a student at LSE (after all, Coase’s major was not economics), Knight’s social cost paper was considered important enough to be subsequently included in a collection of essays edited by George J. Stigler & Kenneth Boulding and published by…