"Yet, Coasean analysis of externalities has been the subject of much
confusion, even disagreement. Demsetz (2003) in particular has
pointed to aspects of the Coase approach that, as a matter of both
economics and of government policy, he finds problematic. As a matter
of economics, Demsetz says, Coase’s focus on transaction costs is
not helpful in resolving questions concerning externalities."
This is from Fred McChesney in the latest issue of the Cato Journal. Read more here.