Coase theorem

proper noun

A theorem stating that, if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to a Pareto efficient outcome regardless of the initial allocation of property.

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Meanings

proper noun
  1. economicsA theorem stating that, if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to a Pareto efficient outcome regardless of the initial allocation of property.

Origin

Introduced by Ronald Coase.

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Cite this entry
APA

Coase theorem. (n.d.). In WatkinsX Dictionary. Retrieved November 4, 2026, from https://dictionary.watkinsx.com/word/Coase%20theorem

MLA

“Coase theorem.” WatkinsX Dictionary, https://dictionary.watkinsx.com/word/Coase%20theorem. Accessed November 4, 2026.

Chicago

WatkinsX Dictionary, s.v. “Coase theorem,” accessed November 4, 2026, https://dictionary.watkinsx.com/word/Coase%20theorem.

Source: Coase theorem on Wiktionary, CC BY-SA 4.0.