economics hard Fill in the Blank

The ___ Theorem states that if property rights are well-defined and transaction costs are low, private parties can bargain to solve the problem of externalities without government intervention.

  1. Coase
  2. NaBFID (or National Bank for Financing Infrastructure and Development)
  3. IDRCL (or India Debt Resolution Company Ltd)
  4. technological

Answer: Coase

Ronald Coase argued that the initial allocation of property rights doesn't matter for efficiency, as long as rights are clear and parties can negotiate costlessly. They will naturally trade rights until the externality is internalized at the socially optimal level.

Topic Microeconomics - Property Rights
Exam Relevance UPSC Prelims, SSC CGL
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