Question
Suppose a home owners association prohibits residents of a neighborhood from owning roosters. A rooster is worth $30 per month to Bob because it increases
Suppose a home owners association prohibits residents of a neighborhood from owning roosters. A rooster is worth $30 per month to Bob because it increases egg production of his chickens. His two neighbors anticipate $20 per month each of annoyance from the rooster's crowing. According to the Coase theorem, how should this situation be resolved?
A.
It would be efficient for Bob to have a rooster, and he will pay $20 per month to each of his neighbors to allow it.
B.
It would be inefficient for Bob to have a rooster, and Bob will not convince his neighbors to permit it.
C.
It would be efficient for Bob to have a rooster, but Bob will not convince his neighbors to permit it.
D.
It would be inefficient for Bob to have a rooster, but he will still convince his neighbors to allow it by paying the $20 per month each.
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