In a world without transactions costs, how will a change in property rights affect

(i) economic efficiency,
(ii) the distribution of income, and
(iii) the allocation of resources? Explain, using the Weak and Strong Coase Theorems.

(i) The Weak Coase Theorem guarantees that, as long as property rights are well-defined, changes in those property rights will have no effect on economic efficiency. Private bargaining among the relevant parties will result in an efficient outcome, no matter how the property rights are assigned.
(ii) Changing property rights will affect the distribution of income. The parties receiving the property right will be better off, and the parties losing the property right will be worse off.
(iii) A change in property rights may or may not affect the allocation of resources. If the resulting redistribution of income does not significantly affect the pattern of market demand, then the Strong Coase Theorem holds and there will be no change in the distribution of income. Otherwise, a different, albeit still efficient, allocation of resources will occur.