Question

Near an ocean beach, a high-rise building is being constructed that will block the scenic view of the ocean by the residents of a low-rise building. The Coase theorem suggests that this type of dispute between the owners of high-rise and low-rise buildings would best be resolved by:

Answer 1

Answer:

The correct answer is The owners themselves.

Explanation:

The Coase Theorem points out that if property rights are well defined and transaction costs are zero, the negotiation between the parties will lead us to an optimal point of allocation in the market.

According to Coase's theorem, when the parties can negotiate freely and without major costs, it does not really matter which part initially has the right of ownership since in the end it will remain in the hands of those who value it most. The final result of the negotiation will lead us to an optimal allocation of resources.

Property rights indicate who owns or has permission to do something.