The Coase theorem states that
A)transaction costs consist of marginal private costs and marginal social costs and are higher when exchange is subject to increasing marginal costs.
B)transaction costs are the difference between marginal social costs and marginal private costs and are higher when exchange is subject to decreasing marginal costs.
C)when transaction costs are significant, the resource-allocative outcome will be the same regardless of who is assigned the property rights.
D)when transaction costs are insignificant, the resource-allocative outcome will be the same regardless of who is assigned the property rights.
E)b and c

Question

Quizplus · Accepted Answer

The Coase theorem posits that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.

The Coase Theorem States That