Question

Explain the significance of coase bargaining solution in solving the externality problem in pollution abatement.

Answer 1

Answer:

The Coase Theorem, developed by economist Ronald Coase, states that when conflicting property rights occur, bargaining between the parties involved will lead to an efficient outcome regardless of which party is ultimately awarded the property rights, as long as the transaction costs associated with bargaining.

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Answer 2

COASE BARGAINING SOLUTIONS:

• Coasian bargaining is based on the idea of RONALD. H. COASE.
• The coase theorem state that the most efficient solution to resolving interdependent use in environment including pollution coase is a bargaining process among relevant property holders.
• If property right are given to pollution. Victims can pay them not a pollute creating a market like solutions akin to a scheme for payment for ecosystems service.
• When the externalities takes place in future or when transaction cost are important and when the number of participants is large, coase solutions to environment externalities must be ruled out .

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Coase solution to a problem of externality ensures that a socially efficient outcome is to

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