The major implication of the _______ is that individuals can solve many externalities if they can buy and sell the right to generate the externality.
A) positional arms race
B) Coase Theorem
C) tragedy of the commons
D) prisoner's dilemma
E) marginal abatement cost

Question

Quizplus · Accepted Answer

The Coase Theorem states that in the presence of well-defined property rights and low transaction costs, bargaining between affected parties will lead to efficient outcomes regardless of the initial allocation of property rights. This means that individuals can solve many externalities (such as pollution) if they can buy and sell the right to generate the externality. Therefore, the major implication of the Coase Theorem is that market-based solutions can be effective in solving externalities.

The Major Implication of the _______ Is That Individuals Can