Thank you ~ Attempts: Average: /3 4. Private solutions to correct for externalit

Question

Thank you ~ Attempts: Average: /3 4. Private solutions to correct for externalities Aa Aa Suppose that a cafe enjoys a large increase in customers whenever the jazz club next door features a band playing appealing music, because it can be easily heard from the cafe. The jazz club owner wants to purchase the cafe so that he can internalize this positive externality. However, the cafe owner does not want to sell her business. The parties may still be able to reach an agreement according to an economic proposition known as parties' ability to This economic proposition depends on the the invisible hand the Coase theorem economies of scale Private solutions to externalities do not always work. One of the primary occurrences of this is when the number of parties involved is so large that it makes QNA 3.16 © 2004-2016 Aplia. All rights reserved. © 2013 Cengage Learning except as noted. All rights reserved. Grade It Now Save & Continue Continue without saving

Explanation / Answer

1. Coase theorem

2. Bargain at low cost

3. Coordinating negotiations between parties too costly

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