Homework Help: Econ MC

Posted by Anonymous on Saturday, March 17, 2007 at 8:06pm.

A local laundry advertises that clothes it washes smell "sunshine fresh" because it line dries everything outside. Then a steel factory moves in next door and emits black smoke which stains the clothes drying at the laundry. According to the Coase Theorem, granting the
a. steel factory the right to pollute would be efficient, but granting the laundry the right to clean air
would be equitable.
b. laundry the right to clean air would be efficient, but granting the steel factory the right to pollute would be equitable.
c. steel factory the right to pollute has the same effect on equity as granting the laundry the right to clean air.
d. steel factory the right to pollute
has the same effect on efficiency as granting the laundry the right to clean air.

would d be the correct answer?

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