3) The Sacramento River has had recent issues with a large farm dumping nutrients and waste into the river. The farmer benefits from dumping the waste because he would otherwise have to pay a waste collection service to come and properly dispose of the waste. Fishermen downstream from the farm are harmed by the pollution because it leads to lower fish populations (and lower catch rates). Use the Coase theorem to explain whether the river would end up polluted. How does who is initially allocated property rights influence the outcome? 4) Suppose that everyone in our used-car example is risk neutral; potential car buyers value lemons at $5,000 and good used cars at $10,000; the reservation price of lemon owners is $3,000; and the reservation price of owners of high-quality used cars is $8,000. The share of current owners who have lemons is 0. a. For what values of 0 do all the potential sellers sell their used cars? Describe the equilibrium. b. Suppose half of the cars are lemons and half of the cars are high-quality. The valuation of potential buyers and the reservation price of lemon owners is the same. What is the reservation price of high-quality owners at which the market unravels