Two large factories (MAC1=7q1; MAC2=21q2, where q means the amount of removed pollution) are operating in the same area, causing serious SO2 emissions (80 and 100 units). The authorities would like to reduce the total pollution in the area by 40 units, and they are considering two policy solutions to achieve this goal:
a norm requiring equal rest emissions tradable pollution permits that are auctioned to the companies

Please calculate and compare the financial effect of the two solutions
For the companies
For the society as a whole
The authorities have decided to use the tradable permits. What will happen if a third company now starts operation in the same area?

Answer rating: 100% (QA)

Q a at m MAG MAC2 loon 1592 3D 3D 41592 ... View the full answer