- What is the efficient solution?
- Let us say the court decides the polluter has no legal obligation to prevent chemical leaks. What will happen if there is no bargaining between the suburb residents and the polluter? What will happen if the polluter and the suburb residents can successfully bargain?
- Let us say a court rules that the polluter is responsible for its chemical leaks, so that it must either stop the leaking (which it could do by installing the backflow preventer) or pay each resident for the damages. What will happen if there is no bargaining between the suburb residents and the polluter? What will happen if the polluter and the suburb residents can successfully bargain?
- Is it likely that the suburb residents and the polluter can successfully bargain to settle the problem? Explain why.
- How should the court decide the case? Explain why.
Suppose the suburb population affected is 10,000 people. The people of the suburb could be drinking thewater (the taps are still running). If they do drink the water, they may experience stomach aches etc., andwe estimate that the medical bills and discomfort amount to $600 a year per person, on average. Thepolluter (“a third party that has been identified” in the article) could install backflow preventer(technological solution) that stops the leakage. Installing this backflow preventer would cost the polluter$3 million a year. Alternatively, the people affected could buy (clear) bottled water in the stores. Bottled water would cost each shopper $250 a year, on averages1(J
