Economics 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 efficient outcomes regarding the allocation of resources affected by externalities, regardless of the initial distribution of property rights. In other words, if property rights are clearly defined and transaction costs are minimal, parties can bargain and find mutually beneficial solutions to externalities without the need for government intervention.