Coase Theorem. One of the traditional arguments in favor of government intervention in the market economy is that unregulated market activity can sometimes lead to failures, like pollution. Critics of government failures to deal with pollution problems effectively argue that there exist private-market solutions to the pollution problem.
A. What is the Coase Theorem?
B. Use the Coase Theorem to explain how the private sector might efficiently deal with pollution problems.

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The Answer of Coase Theorem. One of the traditional arguments in favor of government intervention in the market economy is that unregulated market activity can sometimes lead to failures, like pollution. Critics of government failures to deal with pollution problems effectively argue that there exist private-market solutions to the pollution problem.
A. What is the Coase Theorem?
B. Use the Coase Theorem to explain how the private sector might efficiently deal with pollution problems.