Suppose an individual loves to garden. She uses pesticides that drift across her neighbor's yard. The gardener values the use of the pesticides at $1,500. The neighbor values clean air at $2,000.

a) What does the Coase theorem suggest will take place if the gardener has the right to use pesticides freely?

b) The Coase theorem suggests that private parties can solve the problem of externalities on their own if they can bargain without cost. What is the cost of bargaining that would eliminate the ability for a private solution?