#10. When traffic gets congested, there are negative externalities. For big cities, this creates inefficiency. Could the Coase Theorem fix this problem? a. Yes, it can. The government could assign property rights: X number of drivers can be on the road during peak hours. Everyone could then negotiate an efficient solution. b. No, because bargaining costs are too high. c. No, because the government doesn't have enough information to solve the problem. d. Both b and c.
#10. When traffic gets congested, there are negative externalities. For big cities, this creates inefficiency. Could the Coase Theorem fix this problem? a. Yes, it can. The government could assign property rights: X number of drivers can be on the road during peak hours. Everyone could then negotiate an efficient solution. b. No, because bargaining costs are too high. c. No, because the government doesn't have enough information to solve the problem. d. Both b and c.
Chapter17: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 12QP
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