Parties Affected by Externalities Have an Incentive to Negotiate as Long

Multiple Choice

Parties affected by externalities have an incentive to negotiate as long as

A) the cost of the negotiation is less than the surplus that could be gained.
B) the cost of the negotiation is greater than the surplus that could be gained.
C) the cost of the negotiation is equal to the surplus that could be gained.
D) there is no surplus.
E) the surplus is positive regardless of the cost.