What is the competitive equilibrium price of electricity (under this constraint)and what is the competitive equilibrium quantity produced by each firm under this constraint?
See below for three parts of Scenario 2
Scenario 2A. There are three firms, A;B; and C that produce electricity. The first two firms have the same per-megawatt cost of production equal to $2, while firm C has a per-megawatt cost of $1. The firms differ, however, in their pollution. Firms A;B; and C produce respectively 1, 2, and 3 cubic feet of carbon monoxide per megawatt produced. A cubic foot of carbon monoxide pollutes the environment, and has a
Scenario 2B. Suppose now that the government can measure the amount of pollution issued by each firm, and suppose that the government constrains each firm to emit no more than 9 cubic feet of carbon monoxide.
Scenario 2C Suppose that government allows firms to trade their permits to emit carbon monoxide.
I need your help solving the following question:
-Use Scenario 2B. What is the competitive
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