One could also make a few observations about principal-agent problems and negative externalities associated with private transactions.
Then again, I suppose Coase would say that the lollipop guild could have paid Dorothy not to do this... that just doesn't seem right to me, though.
What about the principle-agent problems and negative externalities of public transactions? How do you know that when you give your taxes to congress that you're getting your money's worth of public goods?
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