Suppose two neighbors share a park.One neighbor,Al,leaves trash in the park.This bothers the other neighbor,Bert.According to Coase's theorem,the optimal level of trash in the park can be achieved if

Question

Quizplus · Accepted Answer

According to Coase's theorem, when there are property rights and low transaction costs, the efficient outcome can be achieved through bargaining between the parties. In this case, Al has the right to leave trash in the park, but Bert can negotiate with him to limit his dumping by offering to pay him. This will encourage Al to reduce his trash dumping in the park as he will receive some compensation for doing so. Therefore, option C is the best choice as it allows both parties to come to an agreement without any external intervention or cost.

Suppose Two Neighbors Share a Park