A chemical producer dumps toxic waste into a river, Managerial Economics

 A chemical producer dumps toxic waste into a river. The waste decreases the population of fish, decreasing profits for the local fishing industry by $100,000 per year. The firm could eliminate the waste at a cost of $600,000 per year. The local fishing industry having of many small firms.

a)  Using the Coase Theorem, describe how costless bargaining will lead to a socially efficient outcome, regardless of whether the property rights are owned by the chemical firm of the fishing industry.

b)  Why might bargaining not be less expensive?

c)  How would your answer to part (a) change if the waste decreases the profits for the fishing industry by $40,000? (Suppose, as before, that the firm could eliminate the waste at a cost of $60,000 per year.)

Posted Date: 3/15/2013 3:03:07 AM | Location : United States







Related Discussions:- A chemical producer dumps toxic waste into a river, Assignment Help, Ask Question on A chemical producer dumps toxic waste into a river, Get Answer, Expert's Help, A chemical producer dumps toxic waste into a river Discussions

Write discussion on A chemical producer dumps toxic waste into a river
Your posts are moderated
Related Questions
Infant Industry Argument Advocates of this maintain that if an industry is just developing, with a good chance of success once it is established and reaping economies of sale,

Search Theory and Unemployment   You must understand the search and matching theories of unemployment in  the context of other theories of unemployment. With this objective  in

Objectives of IMF To achieve these objectives, the following conditions would have to be fulfilled: - i.            Countries should not impose restrictions in their trade

what is line balancing for paper machine?

Equilibrium in a two commodity market Let us consider a two-commodity market model in which the two commodities are related to each other.  Let us assume the functions for bot

Define the term understanding oligopoly. Understanding Oligopoly; One possibility when the two companies will engage into collusion, Sellers engage into collusion while t

(Kinky Demand Curve) Short Period Kinked demand curve was first used by Prof. Paul M. Sweezy to elucidate price rigidity under oligopoly. In an oligopoly market, firm knows that

Problem 1: Using the policy neutrality proposition, Illustrate and determine the effectiveness of applying counter-cyclical monetary policy to stabilise output around its long

how to solve problems using derivatives ?