Your college roommate has the right to practice her tuba during the day. You, however, find that studying during the day is most conducive to good grades, and her tuba-playing makes it difficult for you to concentrate. You make a deal with your roommate: you will clean the dorm room once a week if she will practice her tuba at other times or elsewhere. This is an example of

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This scenario is an example of the Coase theorem, which states that if property rights are well-defined and transaction costs are low, the outcome will be efficient regardless of which party is initially given the property right. In this case, the property right is the right to practice the tuba during the day, and the transaction is the agreement to clean the dorm room once a week in exchange for practicing the tuba at other times or elsewhere. The Coase theorem suggests that the outcome will be efficient because the parties are able to negotiate and bargain to reach a mutually beneficial agreement, even if they have conflicting preferences initially.

Your College Roommate Has the Right to Practice Her Tuba