Which of the following is not a necessary condition for the Coase theorem?
A) Property rights are clearly defined.
B) There are no bargaining costs.
C) The government intervenes to internalize the externality.
D) There are only a few parties involved.

Question

Quizplus · Accepted Answer

The Coase theorem states that in the presence of externalities, private parties can bargain and reach an efficient outcome, regardless of the initial allocation of property rights. To apply the theorem, property rights must be defined, bargaining costs should be low, and there should be a small number of parties involved. The government intervention is not required for the Coase theorem to hold. Therefore, option C is not a necessary condition for the Coase theorem.

Which of the Following Is Not a Necessary Condition for the Coase