According to the Coase Theorem, the Private Market Can Achieve

question 87

Multiple Choice

According to the Coase theorem, the private market can achieve an efficient outcome:

• A) as long as the enforcement of property rights costs less than the marginal benefit of emissions.
• B) only if the property right to clean air is assigned to the polluter.
• C) only if the property right to clean air is assigned to the party harmed by pollution.
• D) if property rights are well defined and bargaining is costless.

---

Definitions:

Scienter

A legal term referring to the knowledge of wrongdoing or fraudulent intent in actions that lead to litigation, particularly in securities fraud.

Silence

The absence of sound or the state of choosing not to speak or respond in communication.

Fraud

Consciously tricking someone in order to gain illicitly or to rob a victim of their rightful due.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another when entrusted with care of money, property, or confidential information.