Your neighbor has a tree that blocks your view of a distant hill. Your neighbor values the tree at $100. You value the tree's removal at $150. Tree removal costs $60. In this case, property rights are clear. Your neighbor owns the airspace extending above his house for some distance. Transaction costs in this case:
A) would allow for a private solution to the external cost.
B) would prohibit a private solution to the external cost.
C) would be equal to zero.
D) are unknown.

Question

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The Answer of Your neighbor has a tree that blocks your view of a distant hill. Your neighbor values the tree at $100. You value the tree's removal at $150. Tree removal costs $60. In this case, property rights are clear. Your neighbor owns the airspace extending above his house for some distance. Transaction costs in this case:
A) would allow for a private solution to the external cost.
B) would prohibit a private solution to the external cost.
C) would be equal to zero.
D) are unknown.

Your Neighbor Has a Tree That Blocks Your View of a Distant