The Coase theorem states that
A)patents and copyrights will solve the problem of external costs.
B)taxes will solve the problem of external costs.
C)global warming is hard to solve due to the prisoners' dilemma aspect of the problem.
D)property rights are social arrangements governing ownership,use and disposal of factors of production and goods and services.
E)if property rights exist,and the transactions costs of enforcing them are low,then private transactions are efficient and it doesn't matter who has the property rights..

Question

Quizplus · Accepted Answer

The Coase theorem states that private transactions are efficient if property rights exist and the transactions costs of enforcing them are low. This means that it doesn't matter who has the property rights as long as they are clearly defined and enforced. Furthermore, the transactions costs should be low enough to allow for negotiation and agreement among parties involved in externalities, leading to efficient outcomes. The other options listed (A, B, and C) are not consistent with the Coase theorem.

The Coase Theorem States That