Coase conjecture

Imagine you and your friend have a toy that you both like to play with. However, you each have different ideas about how to play with the toy, and you can't agree on how to play together. This is called a "disagreement."

The Coase conjecture is a theory that says two people in this situation can work out their disagreement if they can bargain with each other without any costs getting in the way. This means they can talk to each other and try to come up with a solution to their problem without anything else getting in the way.

For example, if you and your friend are playing with the toy and you want to keep it all to yourself, but your friend wants to play with it too, you may be able to bargain with your friend to come up with a solution that makes you both happy. Maybe you can agree to take turns playing with the toy, or share the toy equally.

The Coase conjecture says that if the transaction costs, or the costs to bargain, are low enough, the two people can work out their disagreement without any problems. However, if the transaction costs are high, such as if it costs a lot of money to hire a mediator to help them negotiate, they may not be able to come to an agreement.

So, in essence, the Coase conjecture is saying that two people can resolve their disagreements if they have the ability to talk to each other and come up with a mutually beneficial solution without any high transaction costs getting in the way.