The Coase theorem deals with the problem of pollution by
A) giving the government regulatory power over polluters.
B) making all polluters stop polluting.
C) establishing and enforcing private property rights.
D) having the government take over ownership of all polluting processes.
E) allowing the government to set the proper emission charge.

Question

Quizplus · Accepted Answer

The Coase theorem suggests that if property rights are well defined and there are no transaction costs, private parties can negotiate and reach efficient solutions to externalities such as pollution without the need for government intervention. Therefore, establishing and enforcing private property rights is central to the Coase theorem. None of the other options listed are involved in the Coase theorem.

The Coase Theorem Deals with the Problem of Pollution by