Question: Suppose loser pays all is more efficient than each pays his own. In a jurisdiction that follows each pays his own, the Coase Theorem would

Suppose “loser pays all” is more efficient than “each pays his own.” In a jurisdiction that follows “each pays his own,” the Coase Theorem would predict that the two parties would sign a contract requiring the loser to reimburse the winner, thus adopting the more efficient rule by private agreement. Give some economic reasons why this does not occur in fact.

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