What would the coase theorem imply about the outcome

Reference no: EM131250662

Suppose a factory located next to a river discharges pollution that causes $2 million worth of environmental damage to the residents downstream. The factory could completely eliminate the pollution by treating the water on location at a cost of $1.6 million. Alternatively, the residents could construct a water purification plant just upstream of their town, at a cost of $0.8 million, which would not completely eliminate the environmental damage to them but reduce it to $0.5 million. Under current law, the factory must compensate the town for any environmental damage the factory causes. Bargaining between the factory owner and the town is costless. What would the Coase Theorem imply about the outcome of bargaining between the town and the factory owner?

Reference no: EM131250662

Questions Cloud

Write a summary of the given article : Write a summary of the given article. - The Article for summary is: "Aerospace engineering: design of spacecraft and aircraft".

Evaluate policy options to solve the problem : Identify data sources to evaluate your policy options to solve the problem you identified in higher education. What are the sources? What data will you use? How will you analyze it? What could you not find that you need help locating?

What are the benefits or strengths of christian belief : Analysis: Analyze the Christian worldview by addressing each of the following questions: What are the benefits or strengths of Christian belief? What is troublesome or confusing about Christianity

Setting of the graph to the earliest available : Visit the following site and change the "from" setting of the graph to the earliest available

What would the coase theorem imply about the outcome : Bargaining between the factory owner and the town is costless. What would the Coase Theorem imply about the outcome of bargaining between the town and the factory owner?

Responses to your peers posts provide constructive : You are required to make two (2) responses to the initial posts of two (2) different peers. In each response to your peers' comment on the different types of technology, the advantages and disadvantages they chose and strategies the RN can employ ..

Large batches to building contractors : Coal consumption tends to change with the economic cycle - declining during a recession and increasing during a boom. As a result we would expect coal prices to vary a lot with the economic cycle. Would you agree or disagree?

Write about human rights issues that russia face : Write two pages about Human Rights issues that Russia face; Intro : define Russia and some history and then. a topic sentence which includes the thesis

Define a problem or topic for systematic investigation : Define a problem or topic for systematic investigation and research - obtain and critically assess literature relevant to the research undertaken.

User Account

All Pages