All of the following statements are true in the context of the Coase theorem,except:
A)private bargaining will not always produce an efficient outcome.
B)as long as the property rights are clearly defined and enforced,bargaining between the parties can ensure an efficient outcome.
C)the initial assignment of property rights has distributional implications but will not affect the attainment of an efficient outcome,as long as there is a small number of parties involved.
D)government intervention is necessary to achieve an efficient outcome in the presence of externalities.

Question

Quizplus · Accepted Answer

The Coase theorem argues that private bargaining can lead to an efficient outcome as long as property rights are clearly defined and transaction costs are low. However, in the presence of externalities, private bargaining may not be sufficient to achieve an efficient outcome, and government intervention may be necessary. Therefore, statement D is false as it suggests that government intervention is not necessary in the presence of externalities.

All of the Following Statements Are True in the Context