Two firms can control emissions at the following marginal costs: MC;= $300q1, MC2=$100q2 where q1 and 92 are, respectively, the amount of emissions reduced by the first and second firms. Assume that with no control at all, each firm would be emitting 30 units of emissions or a total of 60 units for both firms. We want to find the cost-effective allocation of control responsibility if a total reduction of 28 units of emissions is necessary. In a cost-effective allocation of emissions reduction, the marginal control costs should be equal. So $ 91 =s 92. Furthermore, the total reduction is 28 units, so q1+ 92" . Solving these two equations, we find q1= and 92- Hint: Type integers.

Two firms can control emissions at the following marginal costs: MC;= $300q1, MC2=$100q2 where q1 and 92 are, respectively, the amount of emissions reduced by the first and second firms. Assume that with no control at all, each firm would be emitting 30 units of emissions or a total of 60 units for both firms. We want to find the cost-effective allocation of control responsibility if a total reduction of 28 units of emissions is necessary. In a cost-effective allocation of emissions reduction, the marginal control costs should be equal. So $ 91 =s 92. Furthermore, the total reduction is 28 units, so q1+ 92" . Solving these two equations, we find q1= and 92- Hint: Type integers.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 12SCQ: Consider the case of global environmental problems that spill across international borders as a...

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