(Consider This) According to the Coase theorem,
A) government should levy excise taxes on firms that generate spillover or external costs.
B) taxes should be levied such that they change private behavior as little as possible.
C) private individuals can often negotiate their own resolution of externality problems, without the need for government intervention.
D) private firms should not provide public goods.

Question

Quizplus · Accepted Answer

According to the Coase theorem, private individuals can often negotiate their own resolution of externality problems without the need for government intervention. This is based on the idea of property rights and bargaining power, where parties involved in an externality can negotiate and come to a mutually beneficial agreement regarding the use of resources. In this way, the market can regulate itself and eliminate externalities without government intervention. Therefore, choice C is the best answer.

(Consider This) According to the Coase Theorem