The Coase theorem suggests that private parties:

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The Coase theorem suggests that private parties can negotiate to correct a negative externality if barriers to negotiation are low. This means that if transaction costs, which can include the cost of gathering information, the cost of bargaining, and the cost of enforcing an agreement, are low, then private parties can make mutually beneficial deals to address externalities without government intervention. However, if transaction costs are high, private parties may not be able to reach an efficient outcome. The Coase theorem assumes that property rights are clearly defined and enforceable, and that all parties involved have perfect information about the situation.

The Coase Theorem Suggests That Private Parties