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Kathy G worries that I failed to point out that perfect Coasean conditions never hold in the real world. This is absolutely correct. There are also no universes composed entirely of two identical spheres. Additionally, the inalienable rights with which all men are self-evidently endowed are frequently, in practice, alienated. I regret the omissions.

Kathy G. is further confused by the concept of "preference maximization". Often when I speak to non-economists, I try to explain things in the terms that they are most likely to understand, rather than the terms that appeared in my Micro textbook. I find this helpful, because almost none of them have read my Micro textbook. Luckily, the person I was talking to was not among those who failed to understand what "preference maximization" meant. Indeed, so far as I can tell, Kathy G. is an army of one in this respect. But confess I have not done a comprehensive research survey; I am relying entirely on the absence of confused emails, comments, or blog posts from anyone besides Kathy G.

For those who, like Kathy G, did not understand it the first or second time, the idea is that absent transaction costs, no matter who you endow with the initial bargaining right, the person with the strongest preference will end up with that preference satisfied. I regret the lack of clarity.

Kathy G additionally says I should have specified that Coasean bargaining is impractical in the absent of clear property rights. I thought that went without saying, since the discussion revolved around who had a clear property right. I regret the error.

Kathy G. avers that the Coase Theorem does not "dictate" anything. Please white out the word "the Coase Theorem dictates" on your screen and replace with "the Coase Theorem would seem to indicate". I regret the infelicitous choice of words.

Finally, Kathy G. says that I should not have tried to apply the Coase theory willy nilly to the real world. This is a very important point. Unless you are a trained economist, like Kathy G., the safest thing to do is only apply it to imaginary worlds. For instance, the sort of world that you are usually discussing when you speculate on the wisdom of giving people unlimited rights in either noise, or the freedom therefrom. I regret any injuries, financial setbacks, broken friendships, harsh words, marital problems, community board showdowns, lawsuits, or blood feuds that may have resulted from unwise attempts at home Coasean bargaining.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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