ECO320H1 Chapter 4: Textbook Notes - Chapter 4 The Elements of Transaction Costs

Provide two real-world examples for each of the following types of transaction costs:

1. search costs

2. bargaining costs

3. enforcement costs

Evaluate if the following statements are true, false, or uncertain.

a. A cost-effective policy is always socially efficient.

b. Enforcement costs are critical to the success of environmental programs and should be included in the overall social costs of the program when evaluating different policy options.

c. The Coase theorem states that social efficiency can be obtained through bargaining and that the gains to each party involved will be identical regardless of who has the rights.

Evaluate the following statements are true, false or uncertain

a) A cost-effecitve policy is always socially efficient

b) Enforcement costs are critical to the success of enviornmental program and should be included in the overall social costs of the program when evaluating different policy options

c) The Coase theorem states that social efficiency can be obtained through bargaining and that the gain to each party involved will be identical regardkess of who has the rights