The Proposition That If Private Parties Can Bargain Without Cost

question 223

Multiple Choice

The proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own, is called

• A)the Pigovian theorem.
• B)a corrective tax.
• C)the externality theorem.
• D)the Coase theorem.

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Definitions:

Environmental Impact Statement

A document that outlines the potential environmental effects of proposed projects, required for government approval in many nations.

NEPA

The National Environmental Policy Act, a US law that mandates federal agencies to assess the environmental effects of their proposed actions prior to making decisions.

Federal Legislation

Laws enacted by the national government of a federal state, which apply across the entire country.

EPA

The Environmental Protection Agency, an agency of the U.S. federal government tasked with protecting human health and the environment by enforcing regulations based on laws passed by Congress.