Suppose a steel mill pollutes the lake and harms a fishing firm. Under a Coase bargaining solution, an efficient solution exists between the two entities if:

A. the property rights to the lake is assigned to the fishing firm.
B. the property rights to the lake is assigned to the steel firm.
C. the property rights to the lake is assigned to the government.
D. the property rights to the lake is assigned, regardless to whom it is assigned, the steel mill or the fishing firm.


Answer: D

Economics

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