Near an ocean beach, a high-rise building is being constructed that will block the scenic view of the ocean for the residents of a low-rise building. The Coase theorem suggests that this type of dispute between the owners of high-rise and low-rise buildings
A)can be resolved by the owners themselves through private bargaining.
B)has to be resolved by city government officials.
C)can only be resolved by a zoning ordinance restricting high-rise buildings.
D)should be resolved by a government fine for the builder of the high-rise.

Question

Quizplus · Accepted Answer

The Coase theorem posits that if property rights are well-defined and transaction costs are low, externalities (like the loss of an ocean view) can be efficiently resolved through private bargaining between the parties involved, without the need for government intervention.

Near an Ocean Beach, a High-Rise Building Is Being Constructed