Asked by Amanda Mejia on Jun 30, 2024
Verified
Refer to Figure 16.4. Suppose the government assigns property rights to the residents of Playa Del Rey, then the airlines and the residents engage in negotiations. The resulting efficient level of air travel is
A) 0 units.
B) 100 units.
C) 120 units.
D) indeterminate from the given information.
Negatively Affects
To cause harm or reduction in quality, performance, or value.
Property Rights
Legal rights that determine the ownership and use of resources such as land, buildings, and intellectual property.
Air Traffic
The movement of aircraft within the earth's atmosphere, controlled and regulated to ensure safety and efficiency.
- Assess the outcomes of distributing and negotiating property rights across different scenarios.
Verified Answer
MB
michelle batemanJul 06, 2024
Final Answer :
B
Explanation :
According to the Coase Theorem, when property rights are clearly defined and transaction costs are low, parties will negotiate to reach an efficient outcome regardless of the initial allocation of rights. In this scenario, assigning property rights to the residents allows them to negotiate with the airlines. The efficient level of air travel would be the one that maximizes the net benefit to both parties, which, based on the information provided, is 100 units.
Learning Objectives
- Assess the outcomes of distributing and negotiating property rights across different scenarios.