If Transactions Costs Exceed the Potential Gains from an Agreement

question 34

True/False

If transactions costs exceed the potential gains from an agreement between affected parties to an externality, there will be no private solution to the externality.

---

Definitions:

Investment Decisions

Choices made by individuals or organizations regarding the allocation of resources to investments, aiming to earn a return over time.

Transportation Infrastructure

The physical and organizational frameworks that support the movement of goods and people, including roads, bridges, ports, and logistics systems.

Operating Decisions

Choices made in the daily operations of a business that affect its efficiency and effectiveness.

Logistical Advantage

The benefit gained by effectively managing the flow of goods, information, and resources in a supply chain, resulting in improved efficiency, reduced costs, or enhanced customer satisfaction.