Economics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 9

Johnston Forest in Rhode Island has a cave that houses thousands of fruit bats. Bat droppings are highly acidic and have ruined the paint on many cars. The flying radius of the Johnston Forest bats encompasses two towns, Johnston and Foster. The residents of Johnston collectively value bat removal at $400,000. Foster residents collectively value bat removal at $500,000. Pest control experts estimate that the cost of bat removal would be $450,000. Which of the following scenarios would lead to removal of the bats? Check all that apply.
a. Foster pays Johnston $50,000 to contribute to bat removal.
b. Foster and Johnston evenly split the cost of bat removal.
c. Johnston contributes nothing toward bat removal.