Assuming that transactions costs are sufficiently low, the Coase theorem results in the economic pie being maximized, regardless of legal constraints. What impact, then, do legal constraints have?

Question

Business

Lorelai Cohen

21 February, 11:58

Assuming that transactions costs are sufficiently low, the Coase theorem results in the economic pie being maximized, regardless of legal constraints. What impact, then, do legal constraints have?

+3

Answers (1)

Know the Answer?

Anya Shah · Answer 1

Based on the information provided within the question it can be said that the main impact of the legal constraints would be that they have the ability to change the way that the economic pie is divided among the different parties, which in term can completely change their well-being. This is because those that receive more wealth are able to provide a better quality of life that those that did not.