The idea that when externalities are present private parties can arrive at the efficient solution without government intervention under certain circumstance is known as ?
Correct answer: A. The coase theorem
- A. The coase theorem
- B. Arrow's impossibility theorem
- C. the drop -in-the bucket problem.
- D. the free rider problem
Explanation
The Coase theorem states that, with well-defined property rights and negligible transaction costs, private parties may bargain to an efficient outcome despite externalities. The other options concern collective choice or free-riding problems.
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