A coase solution to a problem of externality insures ensures that a socially efficient outcome is to: 1) internalize the externality through taxes2) internalize the externality through subsidies3) maximize the joint welfare, irrespective of the right of ownership. 4) stop production if there is any externality. 5) invite other private partners to share the burden of externality.

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Business

Xiomara Solis

8 December, 20:44

A coase solution to a problem of externality insures ensures that a socially efficient outcome is to: 1) internalize the externality through taxes2) internalize the externality through subsidies3) maximize the joint welfare, irrespective of the right of ownership. 4) stop production if there is any externality. 5) invite other private partners to share the burden of externality.

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Damion Bush · Answer 1

The correct answer is number "3": maximize the joint welfare, irrespective of the right of ownership.

Explanation:

Externalities are the side effects of the economy: pollution, noise, unequal distribution, immigration, and resource exploitation are a few examples. the Coase Theorem is a legal and economic theory that looks for economic efficiency in front of externalities like the one described above. In pursuing a Coase solution for externalities that could lead to a socially efficient outcome, increasing the numbers of welfare so enough less favored people and immigrants can have a roof to sleep under might be a good option.