c) Assume that the marginal damage per unit of ambient pollution at the receptor is suchthat MDA(p) = p. What is the efficient amount of ambient pollution, and how muchshould each firm emit?d) Assume the regulator wants to achieve the efficient amount of pollution and emissionsfrom the two firms. The regulator first wants to consider ambient-differentiated emissionfees. What are the two emission fees, t1 and 12, that would achieve the efficient outcome?e) The regulator instead decides to use marketable ambient permits. Overall, the regulatorissues L=13 permits (each permit is for 1 unit of pollution, not emissions), with L1 = 7permits given to firm 1 and L2 = 6 permits given to firm 2. After trading, how muchwould each firm emit? How much would each firm contribute to the overall ambientpollution? What would be the price of a permit? There are two firms who are identical except in their location. For both firms, decreasing theiremissions will increase their costs. Therefore, they have negative marginal costs and positivemarginal savings of polluting. A firm's marginal cost of emitting an amount e is given byMC₁(e) = −6+ e₁. Because of their locations, the two firms differ in their impact on ambientpollution concentrations. One unit of emissions from firm 1 result in one unit of ambientpollution. Firm 2 has twice the impact on ambient environment - one unit of emissions results intwo unit of ambient pollution.a) What are the transfer coefficients for each of the two firms?b)If there were no regulations in place, how much would each firm emit, and what wouldbe the total pollution?

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There are two firms who are identical except in their location. For both firms, decreasing their emissions will increase their costs. Therefore, they have negative marginal costs and positive marginal savings of polluting. A firm's marginal cost of emitting an amount e is given by MC; (e) = -6 + e. Because of their locations, the two firms differ in their impact on ambient pollution concentrations. One unit of emissions from firm 1 result in one unit of ambient pollution. Firm 2 has twice the impact on ambient environment - one unit of emissions results in two unit of ambient pollution. a) What are the transfer coefficients for each of the two firms? b) If there were no regulations in place, how much would each firm emit, and what would be the total pollution?

There are two firms who are identical except in their location. For both firms, decreasing their emissions will increase their costs. Therefore, they have negative marginal costs and positive marginal savings of polluting. A firm's marginal cost of emitting an amount e is given by MC; (e) = -6 + e. Because of their locations, the two firms differ in their impact on ambient pollution concentrations. One unit of emissions from firm 1 result in one unit of ambient pollution. Firm 2 has twice the impact on ambient environment - one unit of emissions results in two unit of ambient pollution. a) What are the transfer coefficients for each of the two firms? b) If there were no regulations in place, how much would each firm emit, and what would be the total pollution?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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