Suppose that your neighbour's dog barks every morning and wakes you up. The marginal benefit of the sleep that you lost is $100. Your neighbour's marginal benefit from owning the dog is $120. Suggest how a private transaction might make you both better off. What if the marginal benefit of your sleep was $120 and your neighbour's marginal benefit from owning the dog was $100.

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The Answer of Suppose that your neighbour's dog barks every morning and wakes you up. The marginal benefit of the sleep that you lost is $100. Your neighbour's marginal benefit from owning the dog is $120. Suggest how a private transaction might make you both better off. What if the marginal benefit of your sleep was $120 and your neighbour's marginal benefit from owning the dog was $100.

Suppose That Your Neighbour's Dog Barks Every Morning and Wakes