According to the Coase theorem,how can an efficient outcome be reached
A)Private parties can bargain to reach an efficient outcome.
B)Government assistance is necessary for markets with externalities to reach an efficient outcome.
C)Both positive and negative externalities will always lead to inefficient outcomes in the markets.
D)No market will experience long-term externalities since normal market adjustments will eliminate externalities.

Question

Quizplus · Accepted Answer

According to the Coase theorem, private parties can bargain and negotiate to reach an efficient outcome even in the presence of externalities. This means that if transaction costs are low and property rights are clearly defined, individuals can internalize the externalities by negotiating with each other and reaching an optimal outcome without the need for government intervention.

According to the Coase Theorem,how Can an Efficient Outcome Be