According to the Coase theorem,under which conditions can private parties solve the problem of externalities
A)if the cost of bargaining is small
B)if the initial distribution of rights favours the person being adversely affected by the externality
C)if the number of parties involved is sufficiently large
D)if the number of parties involved is sufficiently small

Question

Quizplus · Accepted Answer

If the cost of bargaining is small, private parties can solve the problem of externalities by negotiating and agreeing on a solution that is mutually beneficial.

According to the Coase Theorem,under Which Conditions Can Private Parties