According to the Coase Theorem, If Private Parties Can Bargain

question 96

True/False

According to the Coase theorem, if private parties can bargain without cost, then the private market will solve the problem of externalities.

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Definitions:

Decision Makers

Individuals or groups responsible for making choices that determine the course of actions to be followed by an organization or system.

Public Good

A public good is a good that is both non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use and use by one does not reduce availability to others.

Nonrival

A characteristic of a good where its consumption by one individual does not reduce its availability to others; often associated with public goods.

Free-rider Problem

A situation where individuals consume or benefit from resources without paying for them, often leading to under-provision or depletion of those resources.