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Background:
The Coase Theorem is a legal and economic theory developed by economist Ronald Coase regarding property rights, which states that where there are complete competitive markets with no transaction costs and an efficient set of inputs and outputs, an optimal decision will be selected. This theorem has certain limitations like impossible assumptions of equal bargaining power, zero cost of transactions, equal distribution of resources and incentives, and complete information to both parties.- Premises of the Coase Theorem
The presence of clear property rights and the absence of transaction costs are the two prevalent criteria in Coase's Theorem. In Coase's Theorem, the most favorable allocation of property results from effective negotiation or bargaining
Ostrom: Elinor Ostrom's theory stated that local communities are the best at managing their natural resources as they are the ones that use them and that all regulation on the use of resources should be done at the local level, as opposed to a higher, central authority that does not have direct interaction with the resources.
1. Name and describe at least two differences and similarities in Ronald Coase's and Elinor Ostrom's approaches to solving open-access problems.
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