Steven Cheung examined the relationship between beekeepers and apple growers. Cheung noted that: "Pollination contracts usually include stipulations regarding the number and strength of ... [bee] colonies, the rental fee per hive, the time of delivery...the protection of bees from pesticides, and the strategic placing of hives." Cheung suggests that the relationship between beekeepers and apple growers is an example of
A) the Coase Theorem.
B) how excessive legal costs can prevent economic efficiency from being achieved.
C) negative externalities.
D) government intervention improving economic efficiency.

Question

Quizplus · Accepted Answer

The relationship between beekeepers and apple growers, as described by Cheung, reflects the principles of the Coase Theorem. Essentially, this theorem suggests that when property rights are clearly defined, parties can negotiate and form mutually beneficial agreements, regardless of who initially holds those property rights. In this case, the beekeepers own the hives and can offer pollination services to the apple growers in exchange for payment and agreed-upon terms. The two parties can negotiate based on their ability to generate value and reach a mutually beneficial agreement. Therefore, the relationship between beekeepers and apple growers is an example of how the Coase Theorem can encourage the efficient use of resources in economic relationships.

Steven Cheung Examined the Relationship Between Beekeepers and Apple Growers