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What is 18.1 Coase Theorem about?

The Coase Theorem, developed by economist Ronald Coase, posits that private parties can efficiently resolve negative externalities through negotiation when property rights are clearly defined. It highlights the importance of property rights in addressing issues such as pollution, suggesting that parties can bargain to reach a mutually beneficial outcome. However, the theorem has limitations, including the presence of transaction costs, unequal bargaining power, and the assumption of perfect information.

Author

Avni Monga

Language

EN