Coase theorem encourages bargaining for externalities Select One: a) None of the answers is correct b) Where property ownership is not clearly defined c) All the answers are correct d) The bargaining costs are negligible e) The number of people involved is large
Coase theorem encourages bargaining for externalities
Select One:
a) None of the answers is correct
b) Where property ownership is not clearly defined
c) All the answers are correct
d) The bargaining costs are negligible
e) The number of people involved is large
When the act of production or consumption affects the third party who is not involved in the process of consumption and production then it is known as externality.
Externality either imposes cost to the third party or genertae benefit for the third party. The presence of extrnality leads to market failure.
Externality can be positive or the negative. In the presence of negative externality, the market over produce the good and in case of positive externality market underproduce the good.
Step by step
Solved in 2 steps
