The Coase Theorem Will Apply Only If

Multiple Choice

The Coase theorem will apply only if

A) the courts can be used to determine the amount of compensation that must be made to the damaged party.
B) the amount of compensation that must be made to the damaged party is small.
C) the number of people involved is small.
D) an individual who is not affected by the externality can negotiate a settlement between the parties imposing the externality and the parties that are harmed by the externality.