Offering to pay the passenger in front of you to keep her from reclining her airplane seat is an example of

Question

Quizplus · Accepted Answer

This scenario involves a disagreement between two parties regarding the use of a shared resource (the limited space on an airplane). The passenger behind would prefer the passenger in front not to recline, while the passenger in front has the right to do so. Offering to compensate the passenger in front to keep their seat upright is a Coasian solution, where the parties negotiate and come to an agreement that benefits both parties. A Pigovian solution involves imposing a tax or fine on the party causing the externality, which does not apply in this scenario. Tradable exchange contracts also do not apply here, as there is no trade of rights to pollute or use resources. Command-and-control policy involves government regulation and enforcement, which is not applicable in this scenario.

Offering to Pay the Passenger in Front of You to Keep