Brennan owns a dog whose barking annoys Brennan's neighbour Emily.Suppose that the benefit of owning the dog is worth $500 to Brennan and that Emily bears a cost of $700 from the barking.Assuming Brennan has the legal right to keep the dog,what is a possible private solution to this problem
A)Emily pays Brennan $499 to get rid of the dog.
B)Brennan pays Emily $650 for her inconvenience.
C)Emily pays Brennan $650 to get rid of the dog.
D)There is no private solution that would improve this situation.

Question

Quizplus · Accepted Answer

This solution would allow both Brennan and Emily to achieve some benefit. Brennan would receive $650, which is close to what he values his ownership of the dog at ($500), and Emily would avoid the annoyance of the barking, which is valued at $700 by her. Option A would not provide enough compensation to Brennan for giving up something he values at $500, and Option B would not fully compensate Emily for her cost of $700. Option D suggests that there is no possible private solution, but this is not true as Option C shows.

Brennan Owns a Dog Whose Barking Annoys Brennan's Neighbour Emily