In which of these situations would the Coase theorem be MOST likely to work?
A. A thousand firms use a lake, there are no other users, all their costs could be reduced somewhat by polluting, but all would have lower water intake costs if the lake were clean.
B. A group of nine firms use a lake, there are no other users, all their costs could be reduced somewhat by polluting, but all would have lower water intake costs if the lake were clean.
C. Worldwide deep sea fishing rights need to be negotiated among thousands of fishermen from different countries.
D. One hundred and fifty nations need to come to an accord about CFC generation to combat ozone depletion.
Answer:B
In which of these situations would the Coase theorem be MOST likely to work?
A. A thousand firms use a lake, there are no other users, all their costs could be reduced somewhat by polluting, but all would have lower water intake costs if the lake were clean. B. A group of nine firms use a lake, there are no other users, all their costs could be reduced somewhat by polluting, but all would have lower water intake costs if the lake were clean. C. Worldwide deep sea fishing rights need to be negotiated among thousands of fishermen from different countries. D. One hundred and fifty nations need to come to an accord about CFC generation to combat ozone depletion.