According to the Coase Theorem, efficient solutions to negative externalities can be achieved through bargaining. Which of the following is NOT a reason why bargaining may fail in practice?

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To assess why bargaining might fail under the Coase Theorem, we must recall the core conditions that enable efficient bargaining: well-defined property rights, zero or negligible transaction costs, and a clear grouping of affected parties. 
Option a: 'There are a large number of parties taking part in the negotiations.' When many parties are involved, coordinating them becomes complex and costly, raising bargaining costs and potentially preventing a feasible agreement. This at first glance looks like a plausible barrier to bargaining success. 
Option b: 'The transaction cost of bargaining is too high.' High transaction costs directly obstruct the bargaining process by making negotiations impractical or too expensive relative to the gains from agreement, which is a classic reason Coasean bargaining may fail. 
Option c: 'Property right is not well-defined.' Ambiguity or insecurity about who has rights creates holdout problems and disputes over ownership, undermining the ability to negotiate a clear, efficient exchange. This is another fundamental reason for potential failure in reaching an efficient outcome via bargaining. 
Option d: 'There is no government authority to tax the source of the externality.' This statement emphasizes the absence of a governmental tax instrument. Under the Coase framework, taxation is not a required condition for bargaining to yield efficient outcomes; the theory deliberately abstracts from taxation and focuses on private bargaining with well-defined rights and low transaction costs. Therefore, the absence of a government taxing authority does not explain why bargaining may fail in practice within the Coasean setup. In other words, while taxation can alter incentives, it is not a structural reason for Coasean bargaining to fail, since the theory assumes bargains can still occur (under the right conditions) without relying on taxes. 
In summary, options a, b, and c identify practical frictions that can impede bargaining (scale, costs, and rights clarity), whereas option d describes a government tool whose presence or absence is not the core reason Coasean bargaining would fail.}

According to the Coase Theorem, efficient solutions to negative externalities can be achieved through bargaining. Which of the following is NOT a reason why bargaining may fail in practice?

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