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"Private or Public? The Coase Theorem" icon

Private or Public? The Coase Theorem

When an activity results in a negative externality (external cost), the market outcome will not be efficient. In these cases, the government may choose to intervene in the market and impose some form of regulation, for example, a legal restriction or a tax. If the external cost the activity creates is borne by those who conduct the activity, the market outcome will be efficient....

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