Lauren Concrete (LC) is a producer of concrete in Georgetown, TX. Their site sits adjacent to...

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Lauren Concrete (LC) is a producer of concrete in Georgetown, TX. Their site sits adjacent to the Rattlesnake Self Storage facility (RSS). Lauren Concrete is considering using a new process to produce their concrete. Doing so will add $900/day to their profits. However, the new process also creates dust that will disturb the RSS facility just downwind. This will make it harder for RSS to attract clients, costing them $550/day in profits. 7 OC Α' Fr T: IUS X₂ X² A. Given the above information, is it efficient (socially optimal) for Lauren Concrete to use the new process? Explain how you determined this? B For B and C, apply Coase Theorem. B. Assume it is clearly established that RSS has the right to have their property free of the dust (i.e. they can prevent LC from using the new process) and the two firms can negotiate at no cost. Be as specific as you can about any deals the two might make (including ranges of payments firms are willing to make and to receive) and whether the new process will be used. If no deal is possible, explain why not. Also clearly state whether you believe negotiations will lead to an efficient solution? C. Assume instead that it is clearly established that LC has the right to use any process they desire (i.e. they cannot be prevented from using the new process) and the two firms can negotiate at no cost. Be as specific as you can about any deals the two might make (including ranges of payments firms are willing to make and to receive) and whether the new process will be used. If no deal is possible, explain why not. Also clearly state whether you believe negotiations will lead to an efficient solution? Lauren Concrete (LC) is a producer of concrete in Georgetown, TX. Their site sits adjacent to the Rattlesnake Self Storage facility (RSS). Lauren Concrete is considering using a new process to produce their concrete. Doing so will add $900/day to their profits. However, the new process also creates dust that will disturb the RSS facility just downwind. This will make it harder for RSS to attract clients, costing them $550/day in profits. 7 OC Α' Fr T: IUS X₂ X² A. Given the above information, is it efficient (socially optimal) for Lauren Concrete to use the new process? Explain how you determined this? B For B and C, apply Coase Theorem. B. Assume it is clearly established that RSS has the right to have their property free of the dust (i.e. they can prevent LC from using the new process) and the two firms can negotiate at no cost. Be as specific as you can about any deals the two might make (including ranges of payments firms are willing to make and to receive) and whether the new process will be used. If no deal is possible, explain why not. Also clearly state whether you believe negotiations will lead to an efficient solution? C. Assume instead that it is clearly established that LC has the right to use any process they desire (i.e. they cannot be prevented from using the new process) and the two firms can negotiate at no cost. Be as specific as you can about any deals the two might make (including ranges of payments firms are willing to make and to receive) and whether the new process will be used. If no deal is possible, explain why not. Also clearly state whether you believe negotiations will lead to an efficient solution?

Answer rating: 100% (QA)

A Based on available economic data LC new process is socially optimal as n... View the full answer