A chemical factory dumps pollutants into a nearby river (permissible under the existing laws). In lieu of dumping into the river, the factory could pay for the pollution to be hauled to a toxic waste dump site at a cost of $125,000 per year. A vacation resort located downstream from the factory suffers damages estimated at $200,000 per year. Evaluate whether a change in law is necessary to achieve an efficient outcome in this situation.

A chemical factory dumps pollutants into a nearby river permiss