Externalities. A local organic farmer spreads manure over his fields as fertilizer. It smells bad. Her neighbors are also concerned about possible water contamination.
a. What are the conditions of an efficient resolution to this dispute?
b. If there is a law restricting smell and pollution, then what can the process plant do to continue its business? Can there be an efficient outcome?
c. If there is a law allowing pollution (or at least no law prohibiting it), then what could the community do to stop the processing plant? Can there be an efficient outcome?