The Coase Theorem Suggests That Private Solutions to an Externality

question 343

Multiple Choice

The Coase theorem suggests that private solutions to an externality problem

• A)are effective under all conditions.
• B)will usually allocate resources efficiently if private parties can bargain without cost.
• C)are only efficient when there are negative externalities.
• D)may not be possible because of the distribution of property rights.

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