This article uses the Coase theorem to demonstrate the economic costs and benefits of mediation in divorce cases. The Coase theorem holds that "when the numbers of individual transactions are small enough, incentives exist to bargain in such a way as to force their interdependence to be taken into account in economic choices." The article uses the Denver Custody Mediation Project (1979-1980) for information regarding success of custody mediation. The study found that mediated divorces were statistically more cost- and time-efficient than adjudicated divorces for the parties and also the general public.