Question

Jose owns a dog whose barking annoys jose's neighbor jane. Suppose that the benefit of owning the dog is worth $100 to jose and that jane bears a cost of $200 from the barking. Assuming jane has the legal right to prevent jose from having a dog, a possible private solution to this problem is

Answer 1

Jane can incur a once in a lifetime cost of $200 by paying Jose who then makes a $100 profit. The extra $100 that Jose makes will take care of the emotional loss of the dog while the $100 will take care of the wroth of the dog.

The $200 cost for Jane will enable her to enjoy peace and save her further losses as the barking will have been gotten rid off. She will never again suffer the loss.