The Coase Theorem is the proposition that private economic transactions are efficient if the number of involved parties is small, if property rights _______, and transactions costs are _______.
A) exist; high
B) do not exist; high
C) do not exist; low
D) exist; low

Question

Quizplus · Accepted Answer

The Coase Theorem posits that if property rights are well-defined (exist) and transaction costs are low, private parties can negotiate to solve the problem of externalities efficiently on their own.

The Coase Theorem Is the Proposition That Private Economic Transactions