The Coase Theorem is an economic theory proposed by Ronald Coase that suggests that if property rights are well-defined and transaction costs are low, parties can negotiate to resolve conflicts over resource allocation efficiently. This means that regardless of who holds the rights, the outcome will be the same as long as negotiations can occur without significant costs. In practical terms, the theorem implies that externalities, such as pollution, can be addressed through bargaining between affected parties. For example, a factory and nearby residents can reach an agreement that benefits both, leading to an efficient outcome without government intervention.