Coase theorem applies if there are a) zero or sufficiently low transaction costs and b) if parties are able to bargain.

If domains have to be returned back to the registrar b) doesn't apply. Auctions ensure that a) doesn't apply either.

Furthermore, adding a 7 day waiting period before returned domains become available will further ensure that parties cannot trade domains between each other but must purchase from the registrar which makes owning a domain and squatting on it for purposes of selling it pointless.