Coase Overruled At NYU Law School

They may teach the Coase Theorem at NYU, but they don't practice what they teach:

Jay Wilson, a second-year law student at New York University, was desperate to register for a popular course in constitutional law.

Unfortunately for him, the course...was completely booked for the upcoming spring semester. Fortunately, Mr. Wilson had some money to spare. In a posting on an online bulletin board at the law school, Mr. Wilson offered $300 to any student willing to drop the course to make room for him.

"No responses for Con Law yet," he later wrote in a posted message obtained by The New York Sun. "Please please. I'm raising the offer for Levinson to $500. Serious offer." His previous offer apparently went unanswered.

The proposal stunned even the most jaded law students....

Mr. Wilson, they said, took things to a new level: a no-nonsense business deal, the sort of financial transaction that they expect to deal with only after graduation.

....The Web site is called "coarses-list," an allusion to both the online market Craigslist and a University of Chicago scholar and Nobel Prize winner, Ronald Coase.

Mr. Coase, as a typical NYU law student knows all too well, is best known for his theorem arguing that it doesn't matter how governments distribute property rights because the free market will ultimately allocate rights with the greatest efficiency.

Some students noted that the theorem ingrained in them at law school would seem to argue against NYU's prohibition on selling course spots.

As far as an NYU law school vice dean, Barry Adler, was concerned, "Coase's theorem" was not relevant.

"This practice exploits limitations in the University's enrollment technology," Mr. Adler, who teaches at the school, wrote to students in announcing the new policy on Web course-swapping. He said law students have no right to sell spots because the openings are not their "property."

....Mr. Wilson, however, was unrepentant. After finding out about the ban, he posted: "I thought I would have to wait until working in a 'real world' legal job in order to see such abuse of the principles we have been learning here."