Near an ocean beach, a high-rise building is being constructed that will block the scenic view of the ocean for the residents of a low-rise building. The Coase theorem suggests that this type of dispute
Between the owners of high-rise and low-rise buildings
A) can be resolved by the owners themselves through private bargaining.
B) has to be resolved by city government oﬃcials.
C) can only be resolved by a zoning ordinance restricting high-rise buildings.
D) should be resolved by a government ﬁne for the builder of the high-rise.

Question

Quizplus · Accepted Answer

The Coase theorem suggests that the market can resolve disputes like this through private bargaining between the parties involved. The low-rise building owners could potentially pay the high-rise building owners to not construct the building or the high-rise building owners could offer compensation to the low-rise building owners for the loss of their view. It is not necessary for government intervention or fines.

Near an Ocean Beach, a High-Rise Building Is Being Constructed