Coase argues that every case of externalities
A) has a clearly identifiable cause.
B) requires government intervention if efficiency is to be achieved.
C) can be traced back to a principal-agent problem.
D) is reciprocal in nature.

Question

Quizplus · Accepted Answer

Coase argues that externalities are reciprocal in nature, meaning that both parties involved in the externality can take actions to internalize the externality and reach an efficient outcome without requiring government intervention.

Coase Argues That Every Case of Externalities