Suppose a wind turbine is located in a residential area. The noise from the turbine imposes a cost on the households that live near the turbine. However, if the turbine company has to reduce the noise level, it has to incur huge costs, which will significantly reduce the value of the turbine operation. According to the Coase Theorem, which of the following is the best solution?
a. The turbine
company should be assigned the property rights to operate in the locality.
b. The households in the locality should be assigned the property rights to stop any noise pollution from the turbine operation.
c. The government should impose a command-and-control regulation.
d. The property rights can be given to either party, provided the rights are clearly specified.
d
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