1, according to the Coase Theorem, there is no transaction cost, can be clearly defined property rights to solve the problem of square dance nuisance. The Coase Theorem holds that in the case of zero transaction costs, regardless of how the initial property rights are defined, as long as the property rights are clearly defined and allowed to trade, the market mechanism can effectively solve the problem of externalities.
2. For the problem of square dance nuisance, the property rights can be defined to the square dance lovers and the surrounding residents, so that the square dance lovers and the surrounding residents can negotiate and trade on their own. Residents can negotiate with square dance enthusiasts to install soundproofing equipment or find indoor venues for square dance activities. Through the clear definition of property rights and voluntary transactions, transaction costs can be reduced to achieve the optimal allocation of resources and maximize the total social output.