The Coase Theorem States That

Multiple Choice

The Coase Theorem states that:

A) if bargaining is difficult, then regardless of how property rights are assigned, voluntary agreements between parties will remedy the market failures associated with externalities and restore economic efficiency.
B) if bargaining is frictionless, then the initial assignment of property rights determines the market failures associated by externalities and voluntary agreements between private parties are useless.
C) if bargaining is frictionless, then regardless of how property rights are assigned, voluntary agreements between private parties will remedy the market failures associated with externalities and restore economic efficiency.
D) if bargaining is frictionless, market failures must be remedied by government intervention.