The result that,under certain circumstances,no government action is needed to control an externality because it can be eliminated by bargaining between the affected parties is called
A) a Nash Equilibrium.
B) Coase Theorem.
C) Bargaining Theorem.
D) English Bargaining.

Question

Quizplus · Accepted Answer

The result described is referred to as the Coase Theorem, named after economist Ronald Coase. The Coase Theorem states that in the presence of complete information, property rights, and zero transaction costs, private bargaining can result in an efficient allocation of resources, even in the presence of externalities. Therefore, no government intervention is needed to achieve an optimal outcome.

The Result That,under Certain Circumstances,no Government Action Is Needed to Control