Question

Acid rain was the topical pollution concern during the 1990s. It was caused by pollutants released into the air (cars, industry, etc). The Coase Theorem is applicable in this case as bargaining can lead to the socially optimal outcome, namely no acid rain. True, False, or irrelevant.

Answer 1

Ans.

The Coase Theoram is applicable here. It says that when the property rights are given to one party it can be the polluter or the polutee, there will be very less impact on the environment and social impact will be high.
Also it argues that when the cost of transactions are kept absent the social impact and welfare is minimized.
However this theorem has limitations in some cases . Economists argue that when this concept is applied at the large scale it will have limited impact because in those cases the transaction costs will be so high that they will surpass the benefits of the social welfare In the given example of acid rain pollution , which is air pollution this theorem will have limited or no usefulness.

This statement is False.