in-a-scenario-where-a-barking-dog-causes-a-negative-externality-the-owner-values

Question

In a scenario where a barking dog causes a negative externality, the owner values the dog at $700, and the neighbor incurs a cost of $900 due to the noise. If the neighbor has property rights, what is a possible efficient solution?

Accepted Answer

The owner pays the neighbor $800 to keep the dog.

Answer

No payment is made, and the neighbor tolerates the noise.

Answer

The neighbor pays the owner $700 to get rid of the dog.

Answer

The owner pays the neighbor $900 to keep the dog.

In a scenario where a barking dog causes a negative externality, the owner values the dog at \$700, and the neighbor incurs a cost of \$900 due to the noise. If the neighbor has property rights, what is a possible efficient solution?