A paper mill discharges gunk that causes damage

Assignment Help Microeconomics

Reference no: EM13338111

A paper mill discharges gunk that causes damage of $200 to the fishermen's business. The pollution damage can be eliminated in one of two ways: the mill can install a filter at cost $300 or fishermen can install a water treatment plant at cost $100.
a) Identify the efficient outcome.
Assume the fishermen have property right to no Pollution (and the property right is protected
by compensatory damages)
b) Construct a game matrix to illustrate the interaction between the factory and the resident.
c) Suppose first that it is prohibitively expensive for the mill and fishermen to negotiate. What will the outcomes?
d) Suppose instead that the mill and fishermen can bargain costlessly. What will the outcomes be? Note: Apply the Nash bargaining solution where any gain from a bargaining is shared evenly between parties.

Reference no: EM13338111

Questions Cloud

How much additional equity financing is required : The firm does not pay any dividends. Sales are expected to increase by 10 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year?

Summarize the results of the data analysis : Summarize the results of the data analysis.

Given that a population of scores is normally distributed : Given that a population of scores is normally distributed with μ = 110 and σ = 8, determine the following: The percentage of scores that are between a score of 101 and 122.

Distribution of the possible values : Perform the check regarding the sample size that confirms the sampling distribution of the possible values for will be approximately normally distributed.

A paper mill discharges gunk that causes damage : A paper mill discharges gunk that causes damage of $200 to the fishermen's business. The pollution damage can be eliminated in one of two ways: the mill can install a filter at cost $300 or fishermen can install a water treatment plant at cost..

What is the average product of capital : Suppose the production function is given by Q = 5K + 3L. What is the average product of capital when 10 units of capital and 10 units of labor are employed?

What is the probability that the sample mean : What is the probability that the sample mean will be more than 9.0%

The tax revenue and the dead weight loss : The tax revenue and the dead weight loss.

What is the relationship between budget deficits : What is the relationship between budget deficits, net exports and savings nexus. Explain why capital flows liberalizations precondition for the "emergence" of emerging markets?

User Account

All Pages