In many cases the Coase theorem does not work well because
A)there are too few parties at the negotiation table.
B)the government does not know about the Coase theorem.
C)transaction costs are too high.
D)transaction costs are too low.

Question

Quizplus · Accepted Answer

The Coase theorem relies on low transaction costs for parties to negotiate and reach an efficient outcome. However, in many cases such costs may be prohibitively high, preventing the parties from reaching any agreement or a Pareto-efficient outcome. Thus, the theorem may not apply well in such situations.

In Many Cases the Coase Theorem Does Not Work Well