The notion that market participants can negotiate an efficient market outcome, assuming negotiating is costless, is known as the:
A) Coase theorem.
B) blanket theorem.
C) acceptance principle.
D) Dranove principle.

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.

The Notion That Market Participants Can Negotiate an Efficient Market