According to the Coase theorem, which of the following are possible outcomes of assigning property rights?
A. The polluter pays the victim to continue polluting.
B. The victim pays the polluter to reduce pollution.
C. The government must set pollution taxes to ensure efficiency.
D. Market outcomes can achieve efficiency even if externalities exist.
E. The polluter and victim always have equal bargaining power. Choose the most appropriate answer from the options given below:
Tap an option to check your answer.
Market failure, externalities and public goods has come up 114 times in 7 exams since 2006.
What this question tests
This question is on Coase theorem and property rights, part of Market failure, externalities and public goods in Microeconomics.
How bargaining can fix an externality when property rights are clear and costs of bargaining are low.
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Question from the UGC-NET 2025 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.
