According to Coase's analysis,when are private costs and social costs the same?
A) Always.
B) When there are no transactions costs.
C) When property rights are clearly defined.
D) Never.

Question

Quizplus · Accepted Answer

According to Coase's analysis, private costs and social costs are only the same when there are no transactions costs. This is because, in the presence of transactions costs, the cost of negotiating and reaching an agreement between private parties may prevent them from coming to a socially optimal outcome. However, in the absence of transactions costs, private parties can negotiate freely and will reach a socially optimal outcome, meaning that private costs and social costs will be the same.

According to Coase's Analysis,when Are Private Costs and Social Costs