The Coase Theorem is the proposition that private transactions are efficient if property rights exist, if only a _______ number of parties are involved, and if transactions costs are _______.
A) large; high
B) large; low
C) small; low
D) small; high

Question

Quizplus · Accepted Answer

The Coase Theorem posits that for private transactions to be efficient, there must be clearly defined property rights, a small number of parties involved, and low transaction costs. This allows for the externalities to be internalized by the parties involved through negotiation.

The Coase Theorem Is the Proposition That Private Transactions Are