When one party suffers negative external effects due to the actions of another party, a lawsuit may not lead to the efficient outcome if:
A) property rights are not clearly assigned.
B) the parties have incomplete information.
C) the legal costs of the lawsuit are too high.
D) all of the above

Question

Quizplus · Accepted Answer

All of the above factors can contribute to a lawsuit not leading to an efficient outcome in cases of negative externalities. Without clear property rights, it may be difficult to establish who is responsible for the damages caused. Incomplete information can make it difficult to accurately assess the damages suffered and determine the appropriate compensation. Finally, high legal costs can discourage parties from pursuing a lawsuit, even if it is in their best interest.

When One Party Suffers Negative External Effects Due to the Actions