In a situation where a factory pollutes the air of a nearby residential neighborhood, the efficient form of damages or legal protection for the homeowner(s) could be
A regulatory solution by which the government imposes pollution limits and monitors compliance.
An injunction, if the issue is between a single homeowner and the factory and transaction costs are low.
All of these.
Compensatory damages, if the issue is between multiple homeowners and the factory and transaction costs are high.