Coase theorem

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Statement

This result, known as the Coase theorem, Coase's theorem, or Coase's law, states that, even in the presence of externalities (external costs and external benefits), as long as it is possible to create enforceable contracts for costs/benefits arising from that externality, with zero transaction costs, bargaining can lead to an efficient outcome regardless of the initial allocation of property rights. However, the relative wealth or gain for the parties involved does depend on the initial allocation of property rights.