Suppose the Two Countries Can Trade Shares in the Ownership

question 129

Essay

Suppose the two countries can trade shares in the ownership of their perspective assets.Further,assume that a Home owner of a 10 percent share in Foreign land.He will receive 10 percent share in Foreign land,and thus receives 10 percent of the annual Foreign kiwi fruit harvest.Further assume that a Foreign owner of a 10 percent share in Home land is permitted.In this case,a Foreigner is entitled to 10 percent of the Home harvest.Calculate the expected value of kiwi fruit for each investor.Is the investor better off?

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