If Transaction Costs Exceed the Potential Gains from an Agreement

question 61

True/False

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

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Definitions:

Waived Rights

Rights that an individual or entity has voluntarily chosen to relinquish or forsake, often through a formal statement or agreement.

Strict Performance

A legal principle requiring parties to a contract to perform their obligations precisely, without deviation from the contract terms.

Place of Delivery

The specific location agreed upon by the seller and the buyer where the goods will be delivered and ownership is transferred.

Warehouse

A large building where goods are stored before they are distributed for sale or further processing.