The Coase theorem says that, if the appropriate property right is assigned to ____, an efficient solution to an externality problem will be achieved.

Question

Quizplus · Accepted Answer

The Coase theorem suggests that an efficient solution to an externality problem can be achieved, regardless of whether the property rights are assigned to the party causing the externality or the victim of the externality. The key is that the parties are able to negotiate and reach an agreement that minimizes the social costs of the externality. This may involve the party causing the externality paying compensation to the victim, or the victim taking steps to reduce the harm they are experiencing. The important thing is that the property rights are clearly defined and that the parties are able to negotiate and reach an agreement that takes into account the costs and benefits for each of them.

The Coase Theorem Says That, If the Appropriate Property Right