A lake fishing resort and a paper factory share a lake. The factory earns profit of $100,000 annually. Installing a $25,000 piece of equipment to reduce pollution would cause profit to be only $75,000. The beach owners profit is $65,000 if pollution were reduced because of the filtration device but only $30,000 when the factory operates without the device and pollutes. Assuming that the fishing resort owns property rights to the lake,,

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    the paper factory will not install the equipment.
     the fishing resort will pay the factory to install the equipment.
     the fishing resort and the paper factory will split the cost to install the equipment.
     the paper factory will install the equipment.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

0 votes
the paper factory will install the equipment.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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