When negotiation is costly,it makes a difference where liability is placed in terms of reaching an efficient solution to a negative externality problem.

Question

Quizplus · Accepted Answer

When negotiation is costly, liability placement can play a role in finding an efficient solution to a negative externality. This is because liability can affect the behavior of the parties involved, and the cost of negotiation may be reduced if liability is clearly established. Therefore, the answer is true.

When Negotiation Is Costly,it Makes a Difference Where Liability Is