Assertion: The Coase Theorem suggests that in the absence of transaction costs, parties can negotiate to correct market failures without government intervention.
Reason: The Coase Theorem only applies in scenarios where externalities are clear and market participants can reach an efficient outcome through bargaining.
1
Both Assertion and Reason are correct, and Reason explains Assertion
2
Both Assertion and Reason are correct, but Reason does not explain Assertion
3
Assertion is correct, but Reason is incorrect
4
Both Assertion and Reason are incorrect