Two firms can control emissions

Reference no: EM13993936

Two firms can control emissions at the following marginal costs: MC₁ = $200q₁, MC₂ = $100q₂, where q₁ and q₂are, respectively, the amount of emissions reduced by the first and second firms. Assume that with no control at all, each firm would be emitting 20 units or a total of 40 units from both firms. What is the cost effective allocation of control responsibility if this is a nouniformly mixed fund pollutant and if the ambient standard is 12.0 ppm and the transfer coefficient are a₁ = 0.25 and a₂ = 0.5?

Reference no: EM13993936

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