State the Coase theorem. Why is the assumption of zero transaction costs crucial to this theorem?

Answer - The Coase theorem is an economic theory which states that where there are the perfectly competitive markets , and there are no transaction cost , then an efficient set of input and output will be selected regardless of how the property rights are divided. The transport cost is the essential feature to be considered because it may differ from one firm to other.

The transport cost should here necessarily be zero so that there is identical and efficient resource allocation without the assumption of the property rights