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B5. Residents in the Brisbane suburb of Paddington have complained about noise coming from Lang Park Football Stadium (LPFS) during games. One solution is for
B5. Residents in the Brisbane suburb of Paddington have complained about noise coming from Lang Park Football Stadium (LPFS) during games. One solution is for better sound-proofing to be installed around the perimeter of the stadium. The following hypothetical matrix shows the monthly payoffs to Paddington residents and the owners of LPFS when the stadium perimeter is and is not sound-proofed. Gains to LPFS ($/month) Gains to residents ($/month) Sound-proofed 1600 1920 Not sound-proofed 2400 960 (a) Suppose the Brisbane City Council (the local government) decides that because LPFS was operating before many upmarket" residents moved into the area, LPFS has the legal right to make noise. Assuming that residents can negotiate at close to zero cost with the owner of LPFS, is sound proofing likely to be installed? Explain. (b) If the cost to residents of negotiating with the owner of LPFS is $240 / month, is sound proofing likely to be installed? Explain. (c) Is the outcome in (b) socially efficient? Explain. B5. Residents in the Brisbane suburb of Paddington have complained about noise coming from Lang Park Football Stadium (LPFS) during games. One solution is for better sound-proofing to be installed around the perimeter of the stadium. The following hypothetical matrix shows the monthly payoffs to Paddington residents and the owners of LPFS when the stadium perimeter is and is not sound-proofed. Gains to LPFS ($/month) Gains to residents ($/month) Sound-proofed 1600 1920 Not sound-proofed 2400 960 (a) Suppose the Brisbane City Council (the local government) decides that because LPFS was operating before many upmarket" residents moved into the area, LPFS has the legal right to make noise. Assuming that residents can negotiate at close to zero cost with the owner of LPFS, is sound proofing likely to be installed? Explain. (b) If the cost to residents of negotiating with the owner of LPFS is $240 / month, is sound proofing likely to be installed? Explain. (c) Is the outcome in (b) socially efficient? Explain
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