Suppose the industry is currently unregulated and there are only 2 firms in the industry. Both firms are emitting 200 tons of pollution, thus total pollution in the industry is 400 tons. The marginal cost of pollution reduction for the 2 firms are MCR₁ = 2.4Q1, MCR₂ = 3.6Q2 (Q represent tons of pollution reduced by each firm.)

Suppose the industry is currently unregulated and there are only 2 firms in the industry. Both firms are emitting 200 tons of pollution, thus total pollution in the industry is 400 tons. The marginal cost of pollution reduction for the 2 firms are MCR₁ = 2.4Q1, MCR₂ = 3.6Q2 (Q represent tons of pollution reduced by each firm.)

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter17: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

Problem 13QP: Economists sometimes shock noneconomists by stating that they do not favor the complete elimination...

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