Which of the following statements is consistent with the Coase theorem?
A)In the case of zero transaction costs, a property rights assignment (made by a court) will be undone if it benefits the relevant parties to undo it.
B)In the case of zero transaction costs, the resource allocative outcome will be the same no matter who is assigned the property right.
C)Taxes can do what property rights assignments cannot.
D)The market can solve all negative externality problems.
E)a and b

Question

Quizplus · Accepted Answer

The Coase theorem states that in the case of zero transaction costs, the resource allocative outcome will be the same no matter who is assigned the property right. This is because the parties involved will negotiate to reach an efficient outcome, regardless of who has the initial property right.

Which of the Following Statements Is Consistent with the Coase