According to the Coase theorem, _____ in order to solve a negative externality problem efficiently.
A)the property right must be assigned to the party with the least-cost alternative
B)the property right must be assigned to the victim of pollution
C)bargaining costs must be high
D)bargaining costs must be low
E)property rights must be determined by the government

Question

According to the Coase theorem, _____ in order to solve a negative externality problem efficiently.​
A)the property right must be assigned to the party with the least-cost alternative
B)the property right must be assigned to the victim of pollution​
C)bargaining costs must be high​
D)bargaining costs must be low​
E)property rights must be determined by the government​

Quizplus · Accepted Answer

According to the Coase theorem, in order to solve a negative externality problem efficiently, bargaining costs must be low. The theorem states that if property rights are well-defined and transaction costs are low, then parties with conflicting interests can bargain and reach an efficient outcome, regardless of how the property rights are initially assigned. Therefore, the answer is D.

According to the Coase Theorem, _____ in Order to Solve