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Coase Theorem

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Discuss the Coase Theorem. What this theory imply about the role of goverment in dealing with market externalities?

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The "Coase Theorem" given by Ronald Coase, describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that when trade in an externality is possible and there are no transaction costs, bargaining will ...

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The "Coase Theorem" given by Ronald Coase is explained.

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Coase theorem and other concepts are assessed.

1. Despite the appealing logic of the Coase theorem, private actors often fail to resolve on their own the problems caused by externalities.

2. According to the Coase theorem, if private parties can bargain without cost, then the private market will solve the problem of externalities

3. Government intervention in the economy with the goal of promoting technology-producing industries is known as patent policy.

4. A technology spillover is a type of negative externality.

5. According to the Coase Theorem, individuals can always work out a mutually beneficial agreement to solve the problems of externalities even when high transaction costs are involved

6.Most economists prefer regulation to taxation because regulation corrects market inefficiencies at a lower cost than taxation does.

7. The patent system gives firms greater incentive to engage in research and other activities that advance technology.

8. Government can be used to solve externality problems that are too costly for private parties to solve.

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