Assume that the citizens can still build a water purification plant at $600 and the firm...

 

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Assume that the citizens can still build a water purification plant at $600 and the firm at $300, but the pollution damages are $100 instead of $1000. (a) If property rights are assigned to the victims, what is the Coase solution? (b) If property rights are assigned to the firm, what is the Coase solution? Pete's Plant produces a hypothetical chemical, chemical H. As part of their production process, Pete's pollutes a nearby river, which affects a town further downstream. The demand for barrels of chemical H is P = 100-2Q. Pete's produces chemical H in a competitive marketplace at a marginal cost of MC = 3Q. (a) How many barrels of chemical H are produced in the unregulated market place? Assume that the citizens can still build a water purification plant at $600 and the firm at $300, but the pollution damages are $100 instead of $1000. (a) If property rights are assigned to the victims, what is the Coase solution? (b) If property rights are assigned to the firm, what is the Coase solution? Pete's Plant produces a hypothetical chemical, chemical H. As part of their production process, Pete's pollutes a nearby river, which affects a town further downstream. The demand for barrels of chemical H is P = 100-2Q. Pete's produces chemical H in a competitive marketplace at a marginal cost of MC = 3Q. (a) How many barrels of chemical H are produced in the unregulated market place?

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Step 11 a if property rights are assigned to victims then as per the coase theorem they will s... View the full answer