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2. Coase theorem: when property legal rights aren't outlined Evidently, but there is some likelihood of costless bargaining involving the party creating the damaging externality as well as influenced party then such negotiations and bargains may end up into socially ideal outcomes available in the market.
When You will find there's adverse externality, social cost of an financial exercise isn't included with the non-public cost of the action resulting in inefficient industry end result.
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