In episode 12 of the sixth season of The Sopranos, A. J. is watching television with his girlfriend Bianca at her apartment when a group of neighborhood youths begins playing music at a very loud level outside. A. J. approaches the youths and offers them his new mountain bike if they will stop playing the music and leave. The group of youths accepts the mountain bike and leaves. This scene is an example of ________.

Question

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This scene is an example of the Coase Theorem, which suggests that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. A.J. negotiates directly with the youths, reaching an agreement that benefits both parties without external intervention.

In Episode 12 of the Sixth Season of the Sopranos