Extension of Property Rights and the Coase Theorem

The video explains the extension of property rights and how it can correct market failure. It introduces the Coase Theorem, which states that in the absence of transaction costs, property rights lead to efficient outcomes. An example with Tom and James illustrates this concept. The video also discusses the impact of transaction costs, initial ownership, and enforcement challenges on property rights. It concludes by summarizing the key points and highlighting the importance of considering transaction costs and enforcement in real-world applications.

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