Could someone help me,please????

MissP Dukky

Does anybody can answer this problem?Please help me. Thank you so much.

A paper factory dumps polluting chemicals into the river. Thousands of citizens live along the river, and they bring suit, claiming damages. You are asked by the judge to testify at the trail as an impartial expert. The court is considering four possible solutions, and you asked to comment on the potential efficiency and equity of each. Your testimony should be brief.
a. Deny the merits of the case and simply affirm the polluter’s right to dump. The parties will achieve the optimal solution without government.
b. Find in favor of the plaintiff. The polluters will be held liable for damages and must fully compensate citizens for all past and future damages imposed.
c. Order and immediate end to the dumping with no damages awarded.
d. Refer the matter to the Environmental Protection Agency, which will impose a tax on the factory equal to the marginal damage costs. Proceeds will not be paid to the damaged parties.

cavedave

A Coasian explanation of some of these issues is described here

Anonymous1987

The key issue is the externality, i.e. the pollution which is not factored into the pricing of the good with third parties (citizens living along the river) excluded from the transaction.

The important part of this question is you must discuss both the economic efficiency of a solution but also the equity of the solution to all parties involved. Various solutions may be found with varying trade-offs between equity and economic efficiency. This might help you discuss the merits of the actions above.

MissP Dukky

Ahh Thank you all!