3.) Suppose we have a water bottling company downstream from a large industrial farm. The farm uses fertilizer that pollutes the water that this company wants to bottle. The farm saves$100 per acre by using a synthetic fertilizer that pollutes the water, but that pollution costs the water bottling plant$150to clean up before bottling.

a. Suppose you cared about the profits of both companies (maybe you own both). Does it make sense for the farm to use this synthetic fertilizer? Why or why not?

b. If you were the farm, and didn't care about the profits of the water company, would you use the fertilizer? Why or why not?

c. What theorem tells us that these firms can get to the "efficient" solution through bargaining?

d. If you owned the water bottling company, how much would you offer the farmer not to use the fertilizer? Would they accept?

e. What if instead, we gave the water company rights over the water, such that the farm needs to pay them to continue polluting. How much would the farm need to offer the water company to keep polluting? Would the farm offer this value? Why or why not?