Calculate their incentive to adopt the new technology

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Imagine a waste processing plant that is causing air pollution (measured in tons per year), and has marginal abatement costs given by MAC₁ = 100 – 0.005E₁. The marginal damages from the pollution is given by MD = 0.003E. The government establishes liability laws and a judge rules that the town must be compensated for total damages.

The polluter has the opportunity to adopt new abatement technology that would lower its costs to MAC₂ = 60 – 0.003E₂. Calculate their incentive to adopt the new technology?

Reference no: EM13830657

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