Coase solution to a problem of externality ensures that a socially efficient outcome is to
Answers
According to law and economics, coase theorem represents the economic efficiency of economic outcome in the presence of externalities. This theorem features to Nobel Memorial Prize in Economic Sciences winner Ronald Coase during his term at the London School of Economics, SUNY at Buffalo, University of Virginia, and University of Chicago.
A Coase solution to a problem of externality ensures that a socially efficient outcome is to-
- Downfall the production rate if there is any externality.
- Request other private ventures to share the burden of externality.
- Negotiations between party creating externality or party affected by the externality when there are well defined property rights and costless bargaining.
- Government subsidies that lower the cost of consumption and production.
Explanation:
Coase solution in relation to any kind of specific issue associated with any external issue means that there can be some outcome of this socially. First of all there can be an internalization made about these externalities with the aid of subsidiaries. Secondly the joint welfare can be further maximized in spite of ownership rights. Thirdly production can be avoided till externality is not eliminated.