If a laboratory using delicate equipment is located next door to a factory that creates vibrations that alter the readings on the instruments, the negative externality is caused by the fact that the two parties are engaged in incompatible activities.  
If a laboratory using delicate equipment is located next door to a factory that creates vibrations that alter the readings on the instruments, the negative externality is caused by the fact that the two parties are engaged in incompatible activities.  The solution depends on the party that can avoid the problem at a lesser cost, and, if the bargaining costs are small enough, the two parties will agree on the solution regardless of who is assigned property rights. FTP, name this economic theorem, form  ulated by the winner of the 1991 Nobel Prize in Economics.
If a laboratory using delicate equipment is located next door to a factory that creates vibrations that alter the readings on the instruments, the negative externality is caused by the fact that the two parties are engaged in incompatible activities.  
the Coase theorem