7. Assume that the town citizen's have the right to free air and the factory does not have the right to pollute. That is the citizens' own the property right to free air. Now, in a bargaining scenario answer the following questions: a) Given that it is illegal for the factory to use the robots where will production be without a bargaining agreement? b) The minimum acceptable offer that the citizens' will accept for the factory to pollute? c) What is the reservation option of the factory? d) What is the reservation option of the citizens?

7. Assume that the town citizen's have the right to free air and the factory does not have the right to pollute. That is the citizens' own the property right to free air. Now, in a bargaining scenario answer the following questions: a) Given that it is illegal for the factory to use the robots where will production be without a bargaining agreement? b) The minimum acceptable offer that the citizens' will accept for the factory to pollute? c) What is the reservation option of the factory? d) What is the reservation option of the citizens?

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 5PA

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