Business, 25.10.2019 19:43 sierrabuckner645

Suppose that two firms emit a certain pollutant . the marginal cost of reducing pollution for each firm is as follow: mc1=300e1, and mc2=100e2,where e1 and e2 are the amounts(in tons) of emission reduced by the first and second firm, respectively. assume that in the absence of government intervention, firm 1 generate 100 units of emission and firm 2 generates 80 units of emissions. suppose that instead of an emissions fee, the regulatory agency introduces a tradable permit system and issues 100 permits, each of which allows the emission of one ton of pollution. firm 1 uses its political influence to convince the regulatory agency to issue 80 permits to itself, and only 20 permits to firm 2. how many, if any, permits are traded between the firms?

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