The Coase Theorem states that
A. if transaction costs are low, private deals will create externalities and result in inefficient outcomes.
B. if transaction costs are low, private bargaining will result in an efficient solution to the problem of externalities.
C. if transaction costs are low, private markets will create externalities and result in efficient outcomes.
D. if transaction costs are low, the government will regulate an efficient solution to the problem of externalities.
E. if imposed on free markets, government regulations will result in inefficient outcomes and create deadweight loss.

The Coase theorem was developed by Ronald Coase and it states that, "when conflicting property right occur, bargaining between the parties involved will lead to an efficient outcome regardless of which party is ultimately awarded the property rights as long as the transaction costs associated with bargaining are negligible".

Therefore, the underlined sections of the theorem above best fits the chosen option in the question.