The story in your book about Austria and the nuclear power plants is a clear case of which of the following?
A. When externalities exist it is easy to negotiate an agreement between the offender and the offended party.
B. When coal powered plants become offensive countries will switch to nuclear power in order to maintain political stability in a region.
C. The story supports the claim of the Coase Theorem that the liability for actions should be placed on the side that has the lowest cost of correcting the problem.
D. Political differences can sometimes override rationality, raising negotiation costs and making solutions difficult or impossible.
Answer: D
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