When parties who are bargaining to eliminate an externality "hold out" for a better deal,
A)the inefficient outcome persists.
B)the eventual outcome will maximize total well-being.
C)transaction costs must be low.
D)one party will gain more than the other party.

Question

Quizplus · Accepted Answer

Holding out for a better deal can prevent the parties from reaching an agreement, allowing the inefficient outcome to persist.

When Parties Who Are Bargaining to Eliminate an Externality "Hold