For the Coase Theorem to work, three conditions must be satisfied: the basic rights must be clearly understood, there must be no impediments to bargaining, and only a few parties are involved.

Question

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The Coase Theorem posits that if property rights are well-defined, transaction costs are low, and only a few parties are involved, parties can negotiate to resolve externalities efficiently.

For the Coase Theorem to Work, Three Conditions Must Be