Which of the following statements is true?
A)The lower transaction costs are, the more likely individuals will solve negative externality problems through a voluntary exchange.
B)The higher transaction costs are, the more likely individuals will solve negative externality problems through a voluntary exchange.
C)Coase agrees with Pigou that taxing those activities associated with negative externalities is a good idea.
D)a and c
E)none of the above

Question

Quizplus · Accepted Answer

The Coase theorem suggests that if transaction costs are low, parties can negotiate solutions to externalities on their own, making voluntary exchanges more likely to resolve negative externality problems.

Which of the Following Statements Is True