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The Deepwater Horizon oil spill in the Gulf of Mexico created extensive damage to local fishing and tourism industry. Answer the following questions: 1. Does an externality exist in this case? If yes,
The Deepwater Horizon oil spill in the Gulf of Mexico created extensive damage to local fishing and tourism industry. Answer the following questions: 1. Does an externality exist in this case? If yes, is it a negative or positive externality? Why? 2. In case an externality exists, can the Coase theorem apply? Why? If Coase theorem can not be applied, what can government do to correct this market failure?
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