The Coase theorem applies when transactions costs are
A)low and property rights exist.
B)low and property rights do not exist.
C)high and property rights exist.
D)high and property rights do not exist.
E)low and there are no externalities.

Question

Quizplus · Accepted Answer

The Coase theorem states that when transactions costs are low and property rights are clearly defined, parties can negotiate and reach an efficient outcome regardless of how property rights are initially assigned. Parties can internalize externalities by bargaining and reaching a mutually beneficial agreement, resulting in an efficient allocation of resources.

The Coase Theorem Applies When Transactions Costs Are