If these two firms can freely trade the right to pollute, Econometrics

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If these two firms can freely trade the right to pollute

In the preceding question, if each firm is permitted to emit half of the efficient level of pollution, illustrate your answer in a diagram which contains the MAA and MAB curves.

(a) With each firm producing this amount of pollution, how much would it cost each one to reduce pollution by one unit?

(b) If these two firms can freely trade the right to pollute, how many units will they (profitably) trade?

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Econometrics: If these two firms can freely trade the right to pollute

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Econometrics: If these two firms can freely trade the right to pollute

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