Asked by Hallie Adair on Apr 26, 2024
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According to the Coase theorem, if private parties can bargain without cost, then the private market will solve the problem of externalities.
Coase Theorem
A principle that asserts that if property rights are well-defined and transaction costs are negligible, parties will negotiate to correct externalities and allocate resources efficiently.
Private Market
A private market is a part of the financial market in which investments are negotiated directly between parties, without public market listing.
Externalities
Unintended outcomes from business transactions impacting external groups, not included in the product or service pricing.
- Acquire insight into the application and impacts of the Coase theorem in mitigating the problem of externalities.
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Learning Objectives
- Acquire insight into the application and impacts of the Coase theorem in mitigating the problem of externalities.
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