According to the Coase theorem, if the initial distribution of rights favors some party, market efficiency will ensure that the net benefits to that party are maximized.

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The Coase theorem states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of rights. It does not assert that the net benefits are maximized for the party initially favored, but rather that the allocation of resources will be efficient overall.

According to the Coase Theorem, If the Initial Distribution of Rights