Which condition(s) must exist for the Coase Theorem to hold?
I. Property rights must exist.
II. Transactions costs must be measurable.
III. A small number of parties must be involved.
A) I, II and III
B) I and III only
C) II and III only
D) I and II only

Question

Quizplus · Accepted Answer

The Coase Theorem holds under the conditions where property rights are clearly defined (I) and when there are a small number of parties involved (III), which facilitates negotiation and agreement. It does not require transaction costs to be measurable, but rather that they are low or zero.

Which Condition(s) Must Exist for the Coase Theorem to Hold