According to the Coase theorem,externality problems may be solved if the parties involved can negotiate.Which of the following is also required for an efficient solution?
A)clearly defined bargaining costs and low transaction costs
B)enforceable bargaining costs and high transaction costs
C)enforceable property rights and low bargaining costs
D)enforceable property rights and high bargaining costs
E)government intervention

Question

Quizplus · Accepted Answer

Enforceable property rights are necessary to ensure that the parties involved have clear ownership of the resources in question and can negotiate to reach an efficient solution. Low bargaining costs are also desirable as they enable negotiations to take place without significant time or effort. High transaction costs can impede negotiations, making it difficult to reach an efficient solution, while government intervention may not be necessary if property rights are well-defined and transaction costs are low. Therefore, choice C is the best option.

According to the Coase Theorem,externality Problems May Be Solved If