Efficiency in a Noise Dispute
A factory's operations generate a profit of $2,000, but the resulting noise causes a neighboring recording studio to lose $1,500 in revenue. The factory can eliminate the noise by installing soundproofing at a cost of $1,200. Assuming the two parties can negotiate without any transaction costs, briefly explain why the factory will install the soundproofing regardless of whether the law grants the factory the 'right to make noise' or the studio the 'right to quiet'.
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