Granting Water Rights to Fishermen as an Implementation of the Polluter-Pays Principle
Granting fishermen the legal right to clean water is a direct application of the polluter-pays principle within a private bargaining framework. This assignment establishes the fishermen's reservation option as a pollution-free environment, which strengthens their bargaining position. Consequently, any negotiated agreement requires the plantations to compensate the fishermen for the right to pollute up to the Pareto-efficient level. This ensures the polluter bears the cost of the externality, leading to a more favorable distributional outcome for the fishermen compared to when plantations hold the right to pollute.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
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Learn After
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