According to the Coase theorem,_____ in order to solve a negative externality problem efficiently.
A)the property right must be assigned to the party with the highest-cost alternative
B)the property right must be assigned to the victim of pollution
C)bargaining costs must be high
D)bargaining costs must be low
E)property rights must be determined by the government

Question

Quizplus · Accepted Answer

The Coase theorem states that if property rights are well-defined and transaction costs are low, private bargaining will lead to an efficient outcome, regardless of the initial assignment of property rights. Therefore, bargaining costs must be low for Coase theorem to work efficiently.

According to the Coase Theorem,_____ in Order to Solve a Negative