Explain the Coase theorem. In order for the Coase theorem to be applicable, explain which three conditions must be satisfied. Give an example to show how the Coase theorem can be applied

What will be an ideal response?

The Coase theorem is the idea that when externalities are present, private parties can arrive at the efficient solution without government involvement under certain conditions. These three conditions are: basic rights must be clearly understood, there must be no impediments to bargaining, and only a few people can be involved. Answers will vary about applications of the Coase theorem.