When property rights are poorly defined,
A) positive or negative externalities may result
B) the market cannot generate an equilibrium price
C) the market price becomes highly unstable
D) the market must be relied upon to generate efficient allocation of resources
E) no externalities can exist

Question

Quizplus · Accepted Answer

When property rights are poorly defined, it can lead to situations where external costs or benefits (externalities) are not accounted for in market transactions, resulting in either positive or negative externalities.

When Property Rights Are Poorly Defined