Business, 20.03.2020 20:10 gorbyalexis

Suppose a farmer's field abuts a railroad track. The trains create sparks which damage the farmer's crops. Also suppose the railroad can install shields along the tracks which will keep the sparks from burning the crops. In each scenario, which outcome will occur per the Coase Theorem?Scenario I: The farmer has the right to be protected from sparks. The cost of the shields is $1000. The damage to crops is $800.a) Shield installed and paid for by the railroad. b) Shields installed and paid for by the farmer. c) No shields installed -- side payment to farmer from railroad. d) No shields installed -- no side payment (farmer has to put up with crop damage).Scenario II: The farmer has the right to be protected from sparks. The cost of the shields is $800. The damage to crops is $1000.a) Shield installed and paid for by the railroad. b) Shields installed and paid for by the farmer. c) No shields installed -- side payment to farmer from railroad. d) No shields installed -- no side payment (farmer has to put up with crop damage).

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Suppose a farmer's field abuts a railroad track. The trains create sparks which damage the farmer's...