A battery acid producer pollutes the water upstream from the Polar Bear Club, a swimming club. If transactions costs are low, the quantity of pollution will be efficient
A)only if Ronald Coase is a member of the Polar Bear Club.
B)only if Ronald Coase is not a member of the Polar Bear Club.
C)only if water property rights are assigned to the producer.
D)only if water property rights are assigned to the Polar Bear Club.
E)if water property rights are assigned either to the producer or to the Polar Bear Club.

Question

Quizplus · Accepted Answer

According to the Coase Theorem, if transaction costs are low and property rights are well-defined, parties can negotiate to reach an efficient outcome regardless of who holds the property rights.

A Battery Acid Producer Pollutes the Water Upstream from the Polar