According to the Coase Theorem, in the absence of bargaining costs,:
A)property rights are key to determining the final outcome of a dispute.
B)regardless of the initial assignment of property rights, the parties will successfully bargain to the efficient outcome.
C)whichever party has more money will determine the outcome of a dispute.
D)whichever party has the larger initial assignment of property rights will control the outcome of a dispute.

Question

Quizplus · Accepted Answer

The Coase Theorem states that when there are no transaction costs, the initial assignment of property rights does not matter as the parties will come to an efficient outcome through bargaining. This implies that the parties will negotiate until they find a solution that is mutually beneficial, regardless of who has the initial property rights. Therefore, option B is the correct answer. According to the Coase Theorem, if there are no bargaining costs, and assuming rationality and perfect information, then regardless of the initial assignment of property rights, the parties will successfully bargain to the efficient outcome. This means that they will find a way to allocate the resources in a way that maximizes the total joint utility. So, the answer is B.

According to the Coase Theorem, in the Absence of Bargaining