Which of the following statements is correct? A swimming pool, during off-peak h

Question

Which of the following statements is correct?

A swimming pool, during off-peak hours, is non-rival.

According to the Coase theorem, well defined pollution rights, tradable with zero transaction costs, lead to the (socially) efficient equilibrium, no matter who the rights are assigned to.

For the Pigovian tax to be set appropriately and lead to the (socially) efficient equilibrium, regulators must know the level of harm caused at the (socially) efficient equilibrium.

All of the above.

A swimming pool, during off-peak hours, is non-rival.

According to the Coase theorem, well defined pollution rights, tradable with zero transaction costs, lead to the (socially) efficient equilibrium, no matter who the rights are assigned to.

For the Pigovian tax to be set appropriately and lead to the (socially) efficient equilibrium, regulators must know the level of harm caused at the (socially) efficient equilibrium.

All of the above.

Explanation / Answer

All of these statements are correct

Coase theorem proposes that bargaining is a solution to the problem of externality is property rights are well defined and it does not matter who has a property rights. Similarly pigouvian tax can be imposed when the regulators know the level of damage because that will be equal to the tax imposed. Off peak hours can result in a bridge or a swimming pool to be non rival because there is lot of space for additional commuter or additional swimmer.

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