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Mathematics, 23.10.2019 18:10 natalie4085
Suppose that pollution in a neighborhood comes from two factories, with marginal benefit curves given by mb1 = 12 – p1 and mb2 = 8 – p2. the level of pollution in the neighborhood is given by p = p1 + p2. the government wants to limit pollution by instituting a pollution-rights market. the government’s desired level of p is 10, so it prints 10 pollution rights and offers them for sale to the firms. find the equilibrium selling price of a pollution right, as well as the allocation of rights (and hence pollution levels) across the two factories.
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Suppose that pollution in a neighborhood comes from two factories, with marginal benefit curves give...
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