IIT JAM 2026 Question 20: Market failure, externalities and public goods

Consider a case of negative production externality, where $MSC$ is marginal social cost, $MPC$ is marginal private cost, and $MPB$ is marginal private benefit. Assume that the property rights belong to the polluter. As per the Coase theorem, payment $p$ will be acceptable to both parties (i.e., polluter and the affected party) when