Suppose that the nearby campers impose a cost of $500 on you and your roommate. If they had to move to a campsite where they could make as much noise as they wished, they would incur a cost of $200. Think of this as the cost of having to physically pack up their stuff and hike to another site. If they stayed and had to be quiet and not disturb you, they would incur a cost of $300. The park rules specify that whoever arrived first has a right to an undisturbed camping spot. Which of the following outcomes would be consistent with the Coase theorem?

a. You would pay them $250 to move.
b. They would pay you $180 to stay where they are.
c. They would move, as the cost to keep quiet would be more than the cost to move.
d. They would pay you $600 to stay where they are.

Because you hold the property rights, you have the right to an undisturbed campsite. Therefore, there are three possibilities: they can move; they can stay but have to remain quiet; or they can stay, make as much noise as they wish, but have to compensate you for the costs they impose on you. We can eliminate the last solution easily, as paying you $180 would not be enough to compensate you for the $500 cost they would impose on you, and $600 would be more than it would cost them to move or stay and be quiet. Therefore, they either have to move, or they have to stay and be quiet. If they move, they will incur a cost of $200. If they stay and be quiet, they will incur a cost of $300. Therefore, they will move to a different campsite, and you will get your peace and quiet back.

tallinn tallinn · Answer 2 · 2022-04-12T12:09:12+02:00

C: They would proceed, as the cost to keep quiet would be more additional than the cost to proceed.

What are the Property Rights?

You can maintain the property rights, you have the right to undisturbed grounds.

Thus, there are three possibilities: they can move; they can stay but have to stay quiet; or they can remain, make as much bluster as they wish, but have to compensate you for the costs then impose on you.

We can eradicate the last solution easily, as paying you $180 would not be enough to compensate you for the $500 cost they would charge you, and $600 would be better than it would cost them to transfer or stay and be quiet.

Thus, they either have to move, or they have to stay and be silent. When they move, they will incur a cost of $200.

If they remain and also be quiet, they will incur a cost of $300.

Hence, they will move to a further campsite, and also you will get your relaxation and also quiet back.

Find more information about Property Rights here:

https://brainly.com/question/24461495