Theorem

Coase Theorem

Game Theory

The Coase theorem holds that when property rights are well defined and bargaining costs are sufficiently low, private parties can negotiate their way to an economically efficient outcome in the presence of externalities, regardless of which party initially holds the legal entitlement. Formulated in the work of the economist Ronald Coase, the theorem implies that the assignment of property rights affects who bears the cost of an externality but not, under those idealized conditions, whether an efficient allocation of resources is ultimately reached.

Facts

Statement

if the provision of a good or service results in an externality and trade in that good or service is possible, then bargaining will lead to a Pareto efficient outcome regardless of the initial allocation of property 1

Classification

Statement Form

Characterization Theorem 1

Connections

Has Statement Form

Characterization

Entity-backed identity for the statement-form enum value this theorem already carries, resolved to a mathematics concept by an explicit value-to-entity map (phase 3 bucket conversion, docs\design_entity_backed_browse_buckets_20260928.md). The statement-form fact itself stays on the theorem unchanged.

Sources

1. Coase theorem - Wikipedia

Introduction

Quote, Introduction

if the provision of a good or service results in an externality and trade in that good or service is possible, then bargaining will lead to a Pareto efficient outcome regardless of the initial allocation of property

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Coase Theorem

Has Statement Form