Consider the following characteristics:
a)low transaction costs
b)small levels of pollution
c)high levels of pollution
d)clear assignment of property rights.
Which of the above are assumptions behind the Coase Theorem?

Question

Quizplus · Accepted Answer

The Coase Theorem assumes low transaction costs and clear assignment of property rights, which are represented in options a and d, respectively. High levels of pollution are not necessarily assumed, as the theorem states that parties with property rights will negotiate to an efficient solution regardless of the initial distribution of the rights. Small levels of pollution are not explicitly mentioned in the assumptions. Therefore, option C, which includes only a and d, is the correct answer.

Consider the Following Characteristics