The Coase Theorem is an odd relic in the field of economics. When I first saw it in my intro-to-micro class, I thought it was a bit silly. For those that don’t know, the Coase Theorem basically says that given a set of assumptions (perfect competition, no transaction costs, no income effects, etc..), a market under the influence of externalities will maximize the value of production regardless of how property rights are assigned among the market participants*.
Like most models in your into-to-micro class, the assumptions are pretty ridiculous and simply don’t hold in any real world setting. But that’s my inner scientific realist speaking. Many economics professors will tell you that the primary purpose of a basic supply-and-demand model is to teach the intuition behind economic theory – to demonstrate how certain variables (in this case price and quantity) move together. Real world stuff just complicates the picture, you know, the typical instrumentalist creed. However, I still couldn’t square…
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Utopia, you are standing in it! 
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