Using the Coase theorem, why might a firm that currently pollutes a river no one owns pollute the river less if it owned the river?
What will be an ideal response?
The firm would pollute less if it owned the river because its neighbors could compensate the firm if it limits its pollution. If the firm pollutes beyond this limit, it would lose that payment from neighbors and, thereby, incur the cost of polluting.
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Which of the following is(are) the effect(s) of an international trade agreement that provides an incentive and reward for nations NOT to impose tariffs?
I. an increase in world welfare and standard of living II. an opportunity for low-income nations to exploit the gains from trade. III. an opportunity for large countries to improve their terms of trade a. I b. I and II c. I and III d. I, II, and III
The fact that most consumers are unable to describe their preferences in terms of a utility function implies that not all consumer preferences can be represented with utility functions
Indicate whether the statement is true or false