Suppose that a steel plant discharges significant amounts of air pollution.

Residents within a 50-mile radius of the steel plant experience an incidence of lung cancer significantly higher than the national average. A blue-ribbon commission to study the problem determined that there is a direct linkage between air pollution and higher rates of lung cancer. The Coase theorem asserts that the best way to reduce the local incidence of cancer is to assign to the steel plant the private property rights to pollute the atmosphere. In this way, the steel plant can sell clean air to local residents.Will this solution reduce the amount of air pollution emitted by the steel plant? Is this, in fact, the best solution?