According to the Coase theorem, private parties are likely to solve the problem of externalities if:
A)the cost of bargaining is small.
B)the contract is easy to enforce
C)the number of parties involved is relatively small
D)all of the above are true

Question

Quizplus · Accepted Answer

The Coase theorem states that private parties are likely to solve the problem of externalities if the cost of bargaining is small, the contract is easy to enforce, and the number of parties involved is relatively small. Therefore, all of the above factors must be present for private parties to solve the problem of externalities.

According to the Coase Theorem, Private Parties Are Likely to Solve