Question

Which of the following was discussed in lecture to illustrate how something akin to the "Coasian Solution to Externalities" has been implemented in practice? How differences in the costs of doing business and complying with government bureaucracy across different countries can lead to drastically different outcomes in regards to the level of entrepreneurial activity. C How kids at "Chuck E. Cheese's" will often try to ride the carousel for free after another child pays a token to start the ride. How the "Defenders of Wildlife" established the “Bailey Wildlife Wolf Compensation Trust" in order to facilitate the re-introduction of the gray wolf into the wild in the western United States (by compensating ranchers who suffered livestock losses). How the 8 teams in the Alliance of American Football could possibly be ordered from strongest to weakest in 40,320 different ways.

Answer 1

Option (c) is in accordance with the coasian solution because in this both the parties have bargained that the loss of livestock would be compensated by ‘Bailey wildlife wolf compensation trust’ because the reintroduction of gray wolf is externality for the ranchers because the wolves would probably hunt their livestock.