Consider the following characteristics:
a. low transactions costs
b. small levels of pollution
c. high levels of pollution
d. clear assignment of property rights
Which of the above are assumptions behind the Coase Theorem?
A) a, b, and d
B) a, c, and d
C) a and d
D) a only

Question

Consider the following characteristics: 
a. low transactions costs
b. small levels of pollution
c. high levels of pollution
d. clear assignment of property rights
Which of the above are assumptions behind the Coase Theorem?
A) a, b, and d
B) a, c, and d
C) a and d
D) a only

Quizplus · Accepted Answer

The Coase Theorem assumes low transaction costs and a clear assignment of property rights for parties to negotiate and reach an efficient outcome. Pollution levels are not directly an assumption of the theorem.

Consider the Following Characteristics