Business, 18.12.2019 06:31 niyyyareligion
There is an oil refinery located on a river. a fish farm is located in the bay, and is adversely affected by the oil refiner’s water pollution. more oil produces more pollution, and more pollution increases the fish farmer’s costs. the price for refining a barrel of crude oil is po = 200, and the price of a unit of fish is pf = 500. let o and f represent the quantities of oil refined and fish produced by the two firms, respectively. the oil refiner’s cost is co(o) = o^2, and the fish farmer’s cost function is cf(f, o) = f^2+o^2. the fact that o shows up in cf reflects the negative externality.
(a) how much do the firms produce in a decentralized market equilibrium?
(b) show that the decentralized market solution is pareto inefficient.
(c) find the pareto efficient allocation of o.
(d) suppose that the government imposes a tax on the oil refiner that makes the oil refiner pay $t per unit of output produced. is there a t that induces the pareto efficient level of o?
(e) suppose that the fishery has the right to a pollution-free environment. suppose that given this the fishery can bargain with the oil refiner over o, and suppose that the bargaining process is such that the fishery makes a take-it-or-leave it offer to the oil refiner, and the offer can either be accepted or rejected. the offer allows the refiner to produce a certain level of o in exchange for a payment from the refiner to the fishery. if the offer is rejected the oil refiner is not allowed to produce. what will be the outcome of this bargaining process in terms of the quantity of o produced?
Answers: 1
Another question on Business
Business, 21.06.2019 23:00
What is overdraft protection (odp)? a.) a cheap and easy way to always avoid overdrawing a bank account b.) a service to automatically transfer available funds from a linked account to cover purchases, prevent returned checks and declined items when you don’t have enough money in your checking account at the time of the transaction. c.) an insurance policy sold by banks to prevent others from withdrawing your money d.) a service provided by the government that insures individuals bank deposits up to $250,000
Answers: 2
Business, 22.06.2019 08:50
Dyed-denim corporation is seeking to lower the costs of value creation and achieve a low-cost position. as a result, it plans to move its manufacturing plant from the u.s. to thailand, which based on company research, is the optimal location for production. this strategic move will most likely allow the company to realize
Answers: 3
Business, 22.06.2019 10:00
How has internet access changed and affected globalization from 2003 to 2013? a ten percent increase in internet access has had little effect on globalization. a twenty percent decrease in internet access has had little effect on globalization. a thirty percent increase in internet access has sped up globalization. a fifty percent decrease in internet access has slowed down globalization.
Answers: 1
Business, 22.06.2019 11:00
On analyzing her company’s goods transport route, simone found that they could reduce transport costs by a quarter if they merged different transport routes. what role (job) does simone play at her company? simone is at her company.
Answers: 1
You know the right answer?
There is an oil refinery located on a river. a fish farm is located in the bay, and is adversely aff...
Questions
Mathematics, 09.07.2020 03:01
