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Question 5 5 / 5 pts The famous singer Jason Lumberpond likes to drive his solid-gold rocket car back and forth in front of his
Question 5 5 / 5 pts The famous singer Jason Lumberpond likes to drive his solid-gold rocket car back and forth in front of his house. The loud noise from the rocket engines imposes a loss equal to $L on his neighbors. There are two possible ways to avoid that loss. Jason can install an expensive muffler, or the neighbors can install soundproofing on their houses. The muffler costs $C and the soundproofing costs $E. Suppose that E > L > C. Suppose that the neighbors have a property right over installing the muffler. That is, Jason must install the muffler unless he gets permission not to from the neighbors. If there are no bargaining problems, what outcome do we expect? Jason pays the neighbors an amount between L and E for permission not to install the muffler, the neighbors do not install soundproofing. Jason does not install the muffler, the neighbors do not install soundproofing, no payment is made
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