Generally,the Coase Theorem implies that the initial allocation of a property right:
A)determines all aspects of the final outcome of the negotiated agreement.
B)does not determine which person will be entitled to engage in the externality generating activity,but does determine which person will receive compensation.
C)determines which person will be entitled to engage in the externality generating activity,but does not affect which person will receive compensation.
D)must be assigned to the person with the greatest costs.

Question

Quizplus · Accepted Answer

With Coase,the person with the highest value will either buy or keep the right regardless of the initial allocation,but the initial allocation does determine whether that person will have to compensate others.

Generally,the Coase Theorem Implies That the Initial Allocation of a Property