Part 3/8:
Rights Assigned to the Park: In this case, the paper mill would need to pay the park owners to pollute the water. Here, the park's value is dependent on maintaining a clean environment, which would naturally incentivize them to limit pollution to enhance the park's appeal and usage.
Rights Assigned to the Paper Mill: Conversely, if the paper mill has the rights, it would be the responsibility of the park authority or recreational users to pay the mill to reduce pollution.
What makes the Coase theorem intriguing is the assertion that regardless of how these rights are assigned, the outcome remains efficient. The ultimate goal is to reach an "efficient level of pollution," not necessarily zero pollution.