IGNOU MEC 1 2012 - What are the recommendations of Coase to solve the problem of external

Question

What are the recommendations of Coase to solve the problem of externalities?

25 Oct 2017

Answer :

Word Count : 336

Ronald Coase asserted that under perfect competition private and social cost will be equal and addressed a well known problem of market externalities, known as the ‘Spillover Effect’. This occurs when someone other than the buyer must share the benefits or costs of a product. The classic example of such a perception is pollution. Factories can either treat pollution – which costs money- or dump it into the air or water for free. If they choose to dump, they may save their customers some money, but citizens who live near the factory will also pay a price in higher death and disease rates, less fertile land,

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