Fishing, lumbering, tourism, and city buildings in Canada are harmed by acid rain, most of which comes from the United States. According to the Coase theorem, the problem is:

Question

Fishing, lumbering, tourism, and city buildings in Canada are harmed by acid rain, most of which comes from the United States. According to the Coase theorem, the problem is:​

Quizplus · Accepted Answer

The Coase theorem states that if property rights are well-defined and transactions costs are low, then private bargaining between affected parties will lead to an efficient outcome regardless of who is assigned the property rights. However, in this case, international negotiations are necessary, which can be costly and may lead to difficulties in assigning responsibility for the harm caused. Therefore, the problem is hard to solve. Options A, B, and C are incorrect because they do not acknowledge the difficulties in international negotiations and the assignment of responsibility. Option E is incorrect because it is not based on the Coase theorem.

Fishing, Lumbering, Tourism, and City Buildings in Canada Are Harmed