Which of the following is true of the Coase theorem?
A) interested parties can reach an outcome in which everyone is better off
B) the bargain outcome will be inefficient
C) interested parties will need an arbitrator in order to reach an agreement that is efficient
D) none of the above is true

Question

Quizplus · Accepted Answer

The Coase theorem states that when property rights are well-defined, and transaction costs are low, interested parties can bargain and reach an efficient outcome regardless of who is initially assigned the property rights. Therefore, choice A is correct. B is incorrect because the bargain outcome will be efficient. C is incorrect because an arbitrator is not necessary for interested parties to reach an efficient outcome according to the Coase theorem.

Which of the Following Is True of the Coase Theorem