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A factory is located next to a farmer, and sometimes emits pollution that damages the farmer’s crops that are adjacent to the factory. The crop damage can be reduced if the factory installs a scrubber, if the farmer moves her crops, or both. The following table summarizes the cost of the various possible actions, and the crop damage, if any:
Action Crop Damage ($) Farmer’s cost ($) Factory’s Cost ($)
No action 100 0 0
Farmer moves crops 40 10 0
Factory installs scrubber 25 0 30
Farmer moves crops and factory installs scrubber 0 10 30
You arranged the subsequent information to use in evaluating the financial feasibility of starting your own agency.
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