The success of the Coase theorem depends crucially on:

Question

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The Coase Theorem states that if property rights are clearly defined and transaction costs are low, then bargaining between parties will result in the efficient outcome, regardless of how the property rights are initially assigned. Therefore, the success of the Coase theorem depends on one party internalizing the externality and negotiation between the parties. Option A is not sufficient on its own because without negotiation, the parties may not come to an agreement. Option B is not necessary for the Coase Theorem to work, although it may facilitate negotiation. Option C is also not enough because it does not necessarily lead to an efficient outcome unless property rights are clearly defined and transaction costs are low.

The Success of the Coase Theorem Depends Crucially On