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Anant Narain
on Oct 09, 2024

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(Consider This) According to the Coase theorem:

A) government should levy excise taxes on firms that generate spillover or external costs.
B) taxes should be levied such that they change private behavior as little as possible.
C) private individuals can often negotiate their own resolution of externality problems,without the need for government intervention.
D) private firms should not provide public goods.

Coase Theorem

The Coase Theorem posits that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property.

Externality Problems

Occurrences in which the production or consumption of goods and services imposes costs or benefits on third parties not involved in the transaction.

Government Intervention

The involvement by government in the market to influence the allocation of resources and distribution of income.

  • Utilize the Coase theorem in the solution of problems arising from externalities.
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Blake StawarOct 15, 2024
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