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Jack Daniels manufactures whiskey in Lincoln County, Tennessee and earns an after tax profit of V. Lincoln County earns tax revenues from Jack Daniels equal
Jack Daniels manufactures whiskey in Lincoln County, Tennessee and earns an after tax profit of V. Lincoln County earns tax revenues from Jack Daniels equal to T. Assume economic conditions are such that those tax revenues could not be replaced by other firms if Jack Daniels were to shut down. Whiskey production causes a fungus, which feeds on alcohol vapors, to grow on nearby houses, cars, trees, and patio furniture. The value of the damage to residents is D, and the cost to mitigate the damage (thereby eliminating the damage, D) by power washing affected surfaces is C. Assume C < D. Assume there are no laws restricting whiskey production, so effectively Jack Daniels has the right to "pollute" the air with alcohol vapors
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