In law and economics, the Coase theorem (pronounced /ˈkoʊs/) describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to an efficient outcome regardless of the initi...
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http://en.wikipedia.org/wiki/Coase_theorem
The proposition that the allocation of property rights does not matter for economic efficiency, so long as they are well defined and a free market exists for the exchange of rights between those who have them and those who do not. Due to Coase (1960).
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http://www-personal.umich.edu/~alandear/glossary/c.html
(from the article `Coase, Ronald`) ...in which transaction costs and property rights affect business and society. In his most famous paper, `The Problem of Social Cost` (1960), he ... ...firms to cut costs as their businesses expand. The concept of perfect competition therefore assumed that one or more of the small firms must ...
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http://www.britannica.com/eb/a-z/c/101
Informally: that in presence of complete competitive markets and the absence of transactions costs, an efficient set of inputs to production and outputs from production will be chosen by agents regardless of how property rights over the inputs were assigned to the agents. A detailed discussion is in the Encyclopedia of Law and Economics, online. Co...
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http://www.econterms.com/glossary.cgi?query=Coase+theorem
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