Resolving Externalities

This is super funny. Click to enlarge.

A perfect demonstration of Coase Theorem in economics. Basically if there are no transaction costs in the presence of externalities then an efficient outcome can be reached by bargaining/trading.

I’ve been thinking recently that I need to go discuss Coase Theorem with my downstairs neighbors. I’m sure I can provide them some kind of incentive to decrease the affect of the negative externality their loud music/movies imposes on me. I’m sure we could come to arrangement where we are both better off than before.