The Coase theorem states that if transaction costs are low, the number of parties is small, and property rights are well established,
A) private transactions are efficient.
B) the government must intervene to eliminate any externalities in the market.
C) there will be no pollution.
D) Both answers B and C are correct.

Question

Quizplus · Accepted Answer

The Coase theorem posits that under conditions of low transaction costs, a small number of parties, and well-defined property rights, private negotiations will lead to an efficient allocation of resources and resolve externalities without the need for government intervention.

The Coase Theorem States That If Transaction Costs Are Low