The Coase theorem claims that many instances of externality problems can be solved by:
A) government regulations.
B) corrective taxes.
C) negotiations.
D) subsidies.

Question

Quizplus · Accepted Answer

The Coase theorem posits that if property rights are clearly defined and transaction costs are negligible, externalities can be efficiently resolved through private negotiations between the parties involved.

The Coase Theorem Claims That Many Instances of Externality Problems