The Coase theorem implies that an efficient solution is possible only if property rights are well-defined and transactions costs are low.

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The Coase theorem states that in the absence of transaction costs, parties will always be able to negotiate an efficient solution to problems associated with externalities, regardless of the initial allocation of property rights. However, this is only possible if property rights are clearly defined and transactions costs are low. If transactions costs are high, then negotiating a solution may not be feasible, even if property rights are well-defined.

The Coase Theorem Implies That an Efficient Solution Is Possible