alleryStart learning →The Coase theorem needs which condition on transaction costs?
AThey must be shared
BThey must be minimal
CThey must be very high
DThey must be taxed
Answer & Solution
Correct answer: B. They must be minimal
Costless bargaining requires minimal transaction costs, along with clear property rights and rational parties.
Keep practising Public Finance
Browse all Public Finance questions for CA Foundation, or explore more Business Economics topics.
Related questions
The free rider problem assumes people are modelled as what?In a progressive tax system, higher earners pay what?What did Pigou recommend to curb over-production causing external harm?Why does Coasean bargaining fail for a polluting steel factory?Whose theorem says private bargaining can fix externalities?Taxing producers so prices reflect full costs is called what?With positive externalities, output of the good tends to be what?Which is the prototypical example of a negative externality?