What is the market price of an itq

Reference no: EM131298211

A natural spring runs under land owned by ten people. Each person has the right to sink a well and can take water from the spring at a constant marginal cost of $5 a gallon. Table 2 sets out the marginal external cost and the marginal social benefit from the water.

If the government issues ITQs to land owners that limit the total amount of water taken to the efficient quantity, what is the market price of an ITQ?

Reference no: EM131298211

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