Question: Refer to Problem 3. Barton decides to buy a full-sized grand piano. The new payoff matrix is as follows: a. If Statler has the legal

Refer to Problem 3. Barton decides to buy a full-sized grand piano. The new payoff matrix is as follows:

a. If Statler has the legal right to peace and quiet and Barton and Statler can negotiate at no cost, will Barton install and maintain soundproofing? Explain. Is this outcome socially efficient?
b. Suppose that Barton has the legal right to make as much noise as he likes and that negotiating an agreement with Barton costs $15 per month. Will Barton install and maintain soundproofing? Explain. Is this outcome socially efficient?
c. Suppose Statler has the legal right to peace and quiet, and it costs $15 per month for Statler and Barton to negotiate any agreement. (Compensation for noise damage can be paid without incurring negotiation cost.) Will Barton install and maintain soundproofing? Is this outcome socially efficient?

Not Soundproofed soundproofed Gains to Barton $100/month $150/month Gains to Statler $120/month $60/month

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