00:01
Describe an example of a problem that could be solved using the kos theorem.
00:05
Do this by defining a hypothetical situation where one individual is causing a negative externality on another individual.
00:11
Describe whether it matters who holds property rights.
00:15
Define the three necessary conditions for kost theorem to work completely and describe why a failure of these conditions will likely cause cohesion bargaining to fail.
00:25
So the kost theorem is a legal and economic theory that was developed by economist ronald koss.
00:31
Regarding property's rights.
00:33
And it states that where there are complete competitive markets with no transaction costs and an efficient set of inputs and outputs, an optimal decision will be selected.
00:42
It basically asserts that bargaining between individuals or groups related to property rights will lead to an optimal and efficient outcome no matter what that outcome is.
00:51
The cost theorem argues that under the right conditions, parties to a dispute over property rights will be able to negotiate an economically optimal solution regardless of the initial distribution of the property rights.
01:05
The coast theorem offers a potentially useful way to think about how to best resolve conflicts between competing businesses or other economic uses of limited resources.
01:15
In order for the coast theorem to apply fully, the conditions of efficient, competitive markets, and most importantly, zero transaction cost must occur...