In order for a voluntary agreement to be reached in general, transaction costs should be

Question

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Voluntary agreements are more likely to be reached when transaction costs are low relative to expected marginal benefits of the agreement. This means that the costs of negotiating and enforcing the agreement are not too high compared to the benefits that would be gained from reaching the agreement. If transaction costs are too high, it may be more efficient for a government agency to regulate the activity instead.

In Order for a Voluntary Agreement to Be Reached in General