The Coase theorem states that
A)positive externalities are directly related to the weather-the better the weather, the more positive externalities.
B)in the case of trivial or zero transaction costs, negative externalities are more likely to appear.
C)when transaction costs are high, positive externalities will be minimized.
D)in the case of trivial or zero transaction costs, the property rights assignment does not matter to the resource-allocative outcome.

Question

Quizplus · Accepted Answer

The Coase theorem posits that if transaction costs are negligible, the allocation of resources will be efficient and unaffected by the initial assignment of property rights. This means that parties will negotiate to correct any inefficiencies caused by externalities, leading to an optimal allocation of resources regardless of who initially holds the rights.

The Coase Theorem States That