If no one owns the river and the town takes no action to control the waste, what is the quantity of cotton and the deadweight loss created?
The figure illustrates the market for cotton. Consider a small town surrounded by a large cotton farm. Suppose that the cotton grower sprays the plants with chemicals to control insects and the chemical waste flows into the river passing through the town. The marginal social cost of producing the cotton is double the marginal private cost.

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150 125 2 100 75 50 25 100 200 300 400 500 Quantity (tons per month)