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Company X's factory makes noise that would cost $6000 to quieten. The noise causes company Y next door to lose $8000 in productivity and it
Company X's factory makes noise that would cost $6000 to quieten. The noise causes company Y next door to lose $8000 in productivity and it would cost company Y $7700 to install noise-proofing that would shut out the noise. Transactions costs are high. a) True or False? Under no liability, Company Y will install the noise-proofing. b) True or False? Under strict liability, Company X will pay to prevent the noise. c) What is the efficient solution to the noise problem (should it be quietened and by who)?
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