According to the Coase theorem, the private market will need government intervention in order to reach an efficient outcome when externalities are present.

Question

Quizplus · Accepted Answer

According to the Coase theorem, if transaction costs are low, private parties can negotiate and reach an efficient outcome without government intervention, even in the presence of externalities. However, if transaction costs are high, government intervention may be necessary to ensure an efficient outcome.

According to the Coase Theorem, the Private Market Will Need