The Coase theorem uses a ______ solution for a class of externality problems.
A) public
B) lottery-based
C) regulatory
D) private

Question

Quizplus · Accepted Answer

The Coase theorem suggests that private negotiations between parties affected by an externality can yield an efficient outcome regardless of the initial allocation of property rights. Therefore, the solution it proposes is a private one, rather than the public or regulatory solutions. Lottery-based solutions are not applicable to externality problems.

The Coase Theorem Uses a ______ Solution for a Class