In 2008, a man was charged with one count of illegally stocking wild animals, a civil offense. State investigators had accused him of bringing 31 wild hogs from Texas to Wisconsin to hunt on his private land, spawning a feral hog population that has caused thousands of dollars in crop damage to hundreds of farms in the region. Can the Coase theorem apply in this example? Why or why not?
A) No; because a large number of parties are involved
B) Yes
C) No; because transaction costs are low
D) No; because all property rights are clearly defined

Question

Quizplus · Accepted Answer

The Coase theorem suggests that if property rights are well-defined and transaction costs are low, parties can negotiate to resolve externalities. However, in this case, the large number of affected farmers makes negotiation impractical, thus the theorem does not apply.

In 2008, a Man Was Charged with One Count of Illegally