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
Economies and diseconomies of scale are of two types- external andinternal. Internal economies and diseconomies are those which a firm reaps as a result of its own expansion. Conve

Theory of consumer behaviour The role of customers in an economy is of significant importance because consumers spend most of their incomes on services and goods produced by fi

Estimating economic relationships Managerial economics estimates economic relationships between various business factors likeelasticity of demand, income, profit analysis, cos

Define the term forecasting As the term 'forecasting' may appear technical, planning for future is a critical aspect of managing any business or anorganisation.  The long-term

why firms under oligopoly market should follow price rigidity?

Use a computer regression package, to work these two computer exercises. 2. Ozark Bottled Water Products, Inc. hired a marketing consulting firm to perform a test marketing of its

Problem 1: Using relevant examples, discuss the pricing strategies that firms can use to capture value from their customers. Problem 2: You are a manager in a perfectl

It is presumed that every of the different combinations of capital and labour displayed in Table produces the same level of output, which is, 20 units. Combinations are such that i

Intended or planned Investment Expenditure on investment depends on business expectations on the chance of making profits and on the availability of funds for the purchase of p

Features of this system The mixed economy includes elements of both market and planned economies.  The government operates and controls the public sector, which typically cons