The Coase Theorem States That When Transaction Costs Are Low

The Coase theorem states that when transaction costs are low and property rights are enforced,then:

A) bargaining between parties will never lead to an efficient outcome.
B) bargaining between parties will lead to an efficient outcome only if liability is placed on the party that is responsible for the externality.
C) bargaining between parties will lead to an efficient outcome only if the liability is placed on the people affected by the externality.
D) bargaining between parties will lead to an efficient outcome regardless of where liability is placed.

Correct Answer:

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