According to Coasian reasoning, if negotiation is costless:
A)irrespective of the initial distribution of rights, the efficient outcome will minimize the net benefit of the group.
B)the efficient outcome will minimize the net benefit of the individual who has more rights compared to the others in the group.
C)irrespective of the initial distribution of rights, the efficient outcome will maximize the net benefit of the group.
D)the efficient outcome will maximize the net benefit of the individual who has more rights compared to the others in a group.

Question

Quizplus · Accepted Answer

According to Coasian reasoning, if negotiation is costless, the initial distribution of rights does not matter, as the efficient outcome will always maximize the total net benefit of the group. This is because, in a costless negotiation, the parties will be able to negotiate an efficient outcome regardless of their initial bargaining positions. Therefore, irrespective of who has more rights, if the parties negotiate without any transaction costs, the outcome will be efficient and maximize the net benefit of the group.

According to Coasian Reasoning, If Negotiation Is Costless