Suppose a Negative Externality Exists in a Market

Multiple Choice

Suppose a negative externality exists in a market. If transactions costs are low and parties are willing to bargain, then, according to the Coase theorem,

A) an equitable solution can be reached only if property rights are assigned to the victims of pollution and not the polluters.
B) an equitable solution can be reached only if property rights are assigned to polluters and not to the victims of pollution.
C) an efficient solution can be reached regardless of the initial assignment of property rights.
D) government intervention is necessary to reach an efficient and equitable solution.