The proposition that private parties with clearly defined property rights and low transaction costs can resolve externalities problems on their own is called the:
A) voluntary tax theorem.
B) Bee theorem.
C) Coase theorem.
D) transaction cost theorem.

Question

Quizplus · Accepted Answer

The Coase theorem states that private parties with clearly defined property rights and low transaction costs can resolve externalities problems on their own. This means that if property rights are clearly defined and the cost of negotiating and enforcing agreements is low, then affected parties can negotiate and reach an efficient outcome without the need for government intervention. Options A, B, and D are not relevant to this proposition.

The Proposition That Private Parties with Clearly Defined Property Rights