Coase Theorem Concept

Coase Theorem (that in reality is a vision/confirmation and not a theorem) was formulated by Ronald Coase (North American economist) and refers that externalities or economic inefficiencies can be, in certain circumstances, corrected and internalized by negotiation between the affected parts, without intervention need of a regulatory entity. The referred necessary circumstances in order that such is possible are, according to Coase, the negotiation possibility without transaction costs and the existence of property rights guaranteed and well defined.

 

 

Translated from Portuguese by Susana Saraiva, Portuguese-English and English-Portuguese translation specialist. Contact: spams@sapo.pt.