In the case of Pendoley v. Ferreiraa residential development encroached on an established pig farm, causing

residents to complain about the offensive smell. The residents sought an in junction to have the farm shut down. (a) Suppose transaction costs between the residents and the farmer are low. Does it matter for efficiency whether the court grants or denies the in (b) junction? Explain. does the court Now suppose transaction costs are high. What information need to know to decide whether granting the injunction will lead to an ef ficient outcome? (c) Propose a remedy based on a liability rule. What information does the court need to know for your proposed remedy to achieve the efficient outcome