Economics Environmental Externalities Questions
The Coase theorem is an economic theory developed by Ronald Coase that states that in the presence of well-defined property rights and low transaction costs, individuals can negotiate and reach an efficient outcome regardless of the initial allocation of property rights. This means that if there are externalities or conflicts between parties, they can bargain and find a mutually beneficial solution without the need for government intervention. The Coase theorem emphasizes the importance of property rights and the ability of individuals to negotiate and internalize external costs or benefits.