Which of the following is an implication of the Coase Theorem?
A) Bargaining cannot lead to an efficient allocation of resources.
B) Government intervention is not always necessary to solve externality problems.
C) Negotiation leads to an efficient outcome if transaction costs are high.
D) Taxation leads to an efficient allocation of resources regardless of who holds the property rights.

Question

Quizplus · Accepted Answer

The Coase Theorem states that in the absence of transaction costs, parties will negotiate and reach an efficient outcome regardless of who holds the property rights. Therefore, government intervention is not always necessary to solve externality problems.

Which of the Following Is an Implication of the Coase