Answer: The correct answer is "c. Many people are bothered by pollution in the area".
Explanation: The Coase Theorem points out that if property rights are well defined and transaction costs are zero, the negotiation between the parties will lead us to an optimal point of allocation in the market.
Whoever keeps the right will depend on the value of what each party produces and the costs of losing the right to property.
However, Coase's theorem ceases to be valid when there are high negotiation costs, for example between a company and thousands of inhabitants of an area (like in this case) or when property rights are not well defined (all parties believe they have the right to do what they want).