According to the Coase theorem,_____
A)government regulation is necessary to eliminate negative externalities.
B)externality problems can be solved efficiently by the assignment of property rights if transaction costs are low.
C)it is necessary to assign property rights when bargaining costs are high.
D)the assignment of property rights lead to equitable but inefficient solutions to externality problems.
E)externality problems can be solved efficiently by the assignment of property rights if transaction costs are high.

Question

Quizplus · Accepted Answer

The Coase theorem suggests that, under certain conditions, individuals can negotiate and reach inefficient but mutually beneficial solutions to externalities without any government intervention. This is possible when property rights are clearly defined and transaction costs are low.

According to the Coase Theorem,_____