. ▁ ▁The ▁argument ▁forms ▁the ▁basis ▁of ▁the ▁Co ase ▁Theorem ▁as ▁l abeled ▁by ▁George ▁St ig ler . ▁ ▁The oret ical ▁challeng es ▁Gu ido ▁Cal ab res i ▁in ▁his ▁book ▁The ▁Cost s ▁of ▁Acc idents ▁( 1 9 7 0 ) ▁arg ues ▁that ▁it ▁is ▁still ▁efficient ▁to ▁hold ▁companies ▁li able ▁that ▁produce ▁greater ▁wealth . ▁ ▁In ▁the ▁real ▁world , ▁where ▁people ▁cannot ▁negoti ate ▁cost lessly , ▁there ▁may ▁be ▁collect ive ▁action ▁problems ▁of ▁those ▁who ▁caused ▁a ▁n uis ance , ▁for ▁instance ▁by ▁smoke ▁em issions ▁from ▁a ▁factory ▁to ▁many ▁neighbour ing ▁far ms , ▁and ▁so ▁getting ▁together ▁to ▁negoti ate ▁effectively ▁can ▁be ▁difficult ▁against ▁a ▁single ▁poll uter ▁because ▁of ▁coord ination ▁problems . ▁ ▁If ▁it ▁is ▁efficient ▁for ▁the ▁far mers ▁to ▁pay ▁the ▁factory ▁to ▁reduce ▁its ▁em issions , ▁some ▁of ▁those ▁far mers ▁may ▁hold ▁off ▁pay ing ▁their ▁fair ▁share , ▁hoping ▁to ▁get ▁a ▁free ▁ride . ▁The ▁factory ▁may ▁be ▁in ▁a ▁better ▁position ▁to ▁know ▁what ▁measures ▁to ▁take ▁to ▁reduce ▁harm , ▁and ▁can ▁be ▁the ▁che apest ▁avo ider , ▁illustr ating ▁Co ase ' s ▁argument . ▁ ▁C ases ▁and ▁stat utes ▁Co ase ▁uses ▁three ▁main ▁examples ▁in ▁his ▁article ▁to ▁attempt ▁to ▁illustrate ▁his ▁points . ▁The ▁first ▁is ▁a ▁fict ional ▁cattle ▁her der ▁and ▁a ▁far mer , ▁but ▁the ▁second ▁is ▁the ▁case ▁St urg es