According to the Coase theorem, part of what is needed for private transactions to be efficient is that property rights
A) need to be defined by the government to avoid producers exploiting high transactions costs.
B) must be defined, and it is crucial as to who owns the property.
C) need not be defined as long as there are no transactions costs present.
D) must be defined, but it does not matter who owns the property.

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. Thus, while property rights must be clearly defined, the efficiency of the outcome does not depend on who initially owns those rights.

According to the Coase Theorem, Part of What Is Needed