Limitations of Coasian Bargaining

Coase theorem, also known as Coasian bargaining, is a cornerstone of neoclassical economics and provides a framework for understanding how market participants can allocate resources in the absence of transaction costs. However, like any theoretical framework, it has its limitations. Here are some of the key limitations of Coasian bargaining:

1. Assumption of Transaction Costs: The Coase theorem assumes that transaction costs are zero, meaning that it costs nothing to negotiate and enforce contracts. In reality, transaction costs can be substantial, including costs such as legal ______ ________ __________ __________ _________ __________ ____ _______.
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