The proposition that under some circumstances externalities can get resolved through private negotiation is known as:
A)the paradox of externalities.
B)the median-voter theory.
C)the Coase Theorem.
D)logrolling.

Question

Quizplus · Accepted Answer

The Coase Theorem states that in some cases, parties can negotiate and reach an efficient outcome without the need for government intervention. This occurs when property rights are clearly defined, transaction costs are low, and parties are able to negotiate freely. Therefore, the proposition that externalities can get resolved through private negotiation refers to the Coase Theorem. The paradox of externalities refers to the situation where private costs and social costs are not equal, leading to market failure. The median-voter theory refers to the idea that the median voter determines election outcomes, while logrolling refers to legislators exchanging votes to achieve their desired outcome.

The Proposition That Under Some Circumstances Externalities Can Get Resolved