Econ MC
posted by Econ .
Dick owns a dog whose barking annoys Dick's neighbor Jane. Suppose that the benefit of owning the dog is worth $700 to Dick and that Jane bears a cost of $500 from the barking. Assuming Dick has the legal right to keep the dog, a possible private solution to this problem is that
a. There is no private solution that would improve this situation.
b. Jane pays Dick $650 to get rid
of the dog.
c. Jane pays Dick $800 to get rid of the dog.
d. Dick pays Jane $600 for her
inconvenience.
Can private solutions always be reached with the Coase Theroem?
But in this case Dick has the legal rights, so does it mean he could chose not to pay Jane any money? so the answer would be A?
I agree, I too would go with a)
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