According to the Coase theorem, a market will when negative externalities are present.
A)always reach an efficient solution
B)reach an efficient solution if transaction costs are low
C)reach an efficient solution only if the government intervenes in the market
D)reach an efficient solution only if the negative externalities are offset by positive externalities

Question

Quizplus · Accepted Answer

The Coase theorem states that in the absence of transaction costs, parties will bargain to reach an efficient outcome even when there are negative externalities. However, if transaction costs are high, it may be more difficult or costly for parties to bargain and reach an efficient solution. Therefore, the market will only reach an efficient solution if transaction costs are low.

According to the Coase Theorem, a Market Will When Negative