This preview shows page 1. Sign up to view the full content.
Unformatted text preview: possibility of bargaining? d) How does your answer to (c) change when bargaining is costless between the firms? 2. Two identical firms save money from polluting. Each firm has marginal savings from emitting amount e equal to 10 - 2e. The two firms differ in their impact on ambient pollution concentrations. Two units of emissions from firm 1 result in one unit of ambient pollution. Firm 2 has twice the impact on the ambient environment from the same amount of emissions. a) What are the transfer coefficients for each of the two firms? b) If firm 1 is given two emission permits and firm 2 is given four and they are allowed to trade, how many permits will each firm end up with and what will be the price? c) If instead each firm is given two ambient pollution permits and trading takes place, how much will each firm end up emitting and what will be the permit price?...
View Full Document
This note was uploaded on 01/27/2011 for the course ARE 176 taught by Professor Farzin during the Fall '08 term at UC Davis.
- Fall '08