Dartmouth ECON 231 – Suppose that a flower nursery benefits

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June 7th, 2024

Private solutions to correct for externalitiesConsider the following scenario: Suppose that a flower nursery benefits from having a butterfly farm located only a few miles away, because the presence of the insects greatly improves flower pollination. Lawyers for the two companies meet to draft a legal document specifying the number of butterflies the farm promises to maintain in exchange for payments to be made by the nursery.

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