Business, 17.06.2021 15:40 mshields1994

Two power plants are currently emitting 8,000 tons of pollution each ( for a total of 16,000 tons). Pollution reduction costs for Plant 1 are given by MCR1 = 0.02Q1 and for Plant 2 by MCR2 = 0.03Q2, where Q represents the number of tons of pollution reduction (undertaken by ﬁrm denoted by the subscript). Calculate for each policy the pollution reduction costs for each ﬁrm, government revenues, and total pollution reduction costs. Drawing a diagram may help. a) A regulation requiring each plant to reduce its pollution by 5,000 tons
b) A pollution tax of $120 per ton of pollution emitted
c) A tradable permit system in which permits for emissions of 6,000 tons of pollution are issued, 3,000 to each plant.

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Two power plants are currently emitting 8,000 tons of pollution each ( for a total of 16,000 tons)....

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