(Consider This) According to the Coase theorem,
A) government should levy excise taxes on ﬁrms that generate spillover or external costs.
B) taxes should be levied such that they change private behavior as little as possible.
C) private individuals can often negotiate their own resolution of externality problems, without the need for government intervention.
D) private ﬁrms should not provide public goods.

Question

Quizplus · Accepted Answer

The Coase theorem states that private individuals can often negotiate their own resolution of externality problems without the need for government intervention. This means that parties involved in an externality can bargain and come up with a mutually beneficial solution without government intervention. Therefore, option C is the correct answer.

(Consider This) According to the Coase Theorem