Could everyone be made better off if smoking is allowed

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Consider a crowded room with an equal number of smokers and nonsmokers. Each smoker would be willing to pay $1.00 to have the right to smoke. Each nonsmoker would be willing to pay $0.50 to have the room free from smoke. Assume there is a rule that says no smoking is allowed. Could everyone be made better off if smoking is allowed? How? If property rights to clean air are assigned to the nonsmokers, how might the efficient outcome be obtained? What difference does it make to the outcome whether there is initially a rule that smoking is allowed or that smoking is not allowed? What problems might you envision occurring if no smoking is allowed unless all the nonsmokers agree to allow it?

Reference no: EM131142209

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