The paper examines Coase and Pigou's views on how to deal with external effects like environmental pollution. Coase prefers looking at overall efficiency, while Pigou tends to support using taxes or liability to achieve efficiency. Coase criticizes Pigou for suggesting solutions that can give one party absolute rights without considering both sides of the issue. Coase emphasizes reciprocal external effects, where actions that benefit one party may harm another. He argues against Pigou's tools, like strict liability, suggesting that public intervention may not be needed if transaction costs are low. However, Coase does not completely dismiss Pigou’s methods in all situations, even when transaction costs are high. Overall, the key idea is that Coase's approach focuses on considering all sides when addressing externalities, unlike Pigou's more one-sided methods.