Economics · Market Failure
A factory emits smoke affecting a nearby residential area. According to which theorem can affected parties negotiate efficient outcomes without government intervention, provided property rights are well-defined and transaction costs are zero?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Externality principle
- 2Laffer curve
- 3Coase theorem✓
- 4Pigouvian tax
Correct answer
Coase theorem
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