Bridgman is a candy maker who uses machines that generate noise and vibration. Sturges is a doctor next door whose consulting room is on the boundary of Bridgman's property and so is affected by the noise and vibration. The court has granted the doctor an injunction that prevents Bridgman from using his machinery. Assume that the transaction costs required for Bridgman and Sturges to get together and bargain are negligible. Based on this information, which of the following statements is correct?
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Bridgman's candy making generates noise and vibration that negatively affects Sturges's consulting room. The court's injunction prevents Bridgman from using his machinery, effectively stopping the negative externality. Show more…
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Mauya M.
Suppose a confectioner (candy maker) and a doctor share a building for work. The confectioner uses half of the building, and the doctor meets with patients in his office in the other half of the building. Suppose the confectioner uses a very loud machine that shakes the entire building and prevents the doctor from completing her work. Suppose the doctor has a property right to quite in his workplace. If the confectioner values use the machine more than the doctor values quite, how might the two bargain to come to a solution?
Manasvee S.
When transaction costs = 0: 1) Joint cooperative surplus decreases. 2) Injunctions and Damages are equally efficient remedies. 3) Injunctions are more efficient than damages. 4) Bargaining cannot occur due to transaction costs.
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