Andy owns a Candy factory with noisy machines which disturb his neighbor Barb.

Andy profits from running his noisy factory by ^A =100,000. Producing candy without making noise would be costly for Andy - if Andy were forced to run his factory silently, the profits of the factory would fall by 60,000 so he would only make a profit of 40,000. Otherwise, Andy could just shut down his factory entirely and earn nothing.

Barb gets a payoff of ^B =70,000 from a quiet neighborhood. She will get a payoff of zero (^B =0) if she has to endure Andy's noise. Barb could wear earplugs, but that discomfort and inconvenience would leave her with a payoff of only ^B =20,000.

Suppose Barb is given an injunction against the noise nuisance from Andy's factory, requiring Andy to either shut down or operate silently. If bargaining is possible, what is Andy's threat value?