Question

Which of the following is a problem with the Coase Theorem?

Multiple Choice
a. Transaction costs are high in many situations
b. Government intervention is a better solution for most externalmes
c. Externalities can be fixed with taxes and subsisties more easily
d. Property rights are rarely defined clear enough

Answer 1

The problem with the Coase Theorem is that transaction costs can be high in many situations.

Step-by-step explanation:

The problem with the Coase Theorem is that transaction costs are high in many situations. Transaction costs refer to the costs incurred when parties involved in a transaction negotiate and come to an agreement. In many real-world situations, it can be difficult and costly for parties to reach an efficient outcome through negotiation, which undermines the effectiveness of the Coase Theorem.