The Internet’s Greatest Coase Theorem Violation: Nissan.com

I recently blogged about how well the Coase Theorem does online. It predicts that, regardless of who is assigned property rights, the interested parties will strike a bargain to put the asset in the hands of the party that values it the most. Thus, despite the fact that more or less anyone can purchase a URL for a small amount of money, in practice, these URLs almost always lead to a site that we would expect them to, because this is presumably the most efficient outcome.

There are, of course, always interesting exceptions. As such, I challenged our readers to find Web addresses that do not lead to a place you might expect. As always, with a little bit of Freakonomics memorabilia as enticement, the collective knowledge of the readers proved immense. Still, there just weren’t that many good examples to be had.

Here is the best of what you found:

Whitehouse.org leads you to a site that mocks George Bush.

ForeignAffairs.com won’t lead you to the magazine, but it will help you find a Russian bride. (There is likely more demand for the latter than the former anyway.)

Like American.com (the example I gave in my original post, when I noted that it doesn’t lead to the airline), Northwest.com is similarly not owned by Northwest Airlines.

A different sort of breakdown of the Coase Theorem is when a site you might expect to be associated with a person or product leads you nowhere. For instance, you might guess that Warren Sapp would want his web address to be Warrensapp.com, but instead it is Qbkilla.com. A Time magazine article describes how Sapp was unwilling to pay the cybersquatter $5,000 for the rights to the Web address bearing Sapp’s name. We now know how much Sapp values having that address: less than $5,000. Similarly, WWF.com won’t take you to the professional wrestling or the wildlife preservation home pages; instead, it essentially leads you nowhere.

The prize-winning violation of the Coase Theorem, however, goes to Nissan.com. Don’t expect to find cars there, only computers. An Israeli-born man named Uzi Nissan owns the site and describes his legal battle with Nissan Motors on the page. I love the fact that one of the arguments he makes against Nissan Motors is that 44 percent of the automaker is owned by Renault, a French company that is, in turn, partly owned by the French government. If it is French, it must be bad, apparently.

Congratulations to Justin, the winner of the contest, and to Ronald Coase for coming up with a theory that works so well in practice, despite a few exceptions.