Flat land is hard to find in a West Virginia town. So the squabble that grew out of some neighborhood kids using a level vacant lot for Saturday and Sunday afternoon football games was no surprise. The Little League even arranged to have practices there some afternoons in the summer. The absentee owner lived in Florida. But the property’s “overseer” who lived near the lot felt compelled to push back and seek court action due to the noise and a little trash left behind. In the end the youths and the Little League contacted the owner and all agreed to mow the lot and keep it up year-round in exchange for its usage. This is an example of: *
a. monopsony.
b. game theory
c. the Coase Theorem.
d. Pigovian taxes
The given scenario is clearly not a case of monopsony because that can be many buyers of that land. The given scenario is not an example of Pigovian taxes because here no government is involved. It is considered as game theory because both the parties involved here go to have their strategies and during interaction they came up with the rational strategy that benefits both of them. There is no economic allocation involved here and therefore it is not coase theorem.
Therefore (b) game theory is the answer.
Flat land is hard to find in a West Virginia town. So the squabble that grew...
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