4 Suppose a country has two firms, each engaged in different industries. Suppose that the marginal cost
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4 Suppose a country has two firms, each engaged in different industries.
Suppose that the marginal cost of pollution reduction (MCR) at one firm is given by:
where QR is the amount of reduced pollution, and the marginal cost of pollution reduction at the other firm is given by:
Note that the firm with MCR given by (11.1) has a higher level of marginal reduction cost at all levels of pollution than the firm with the MCR given by (11.2), hence the labels “H,” for high-cost, and “L” for lowcost.
Assume that, in the absence of laws against pollution in this country, each firm will pollute 100 units.
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Entrepreneurship The Practice And Mindset
ISBN: 9781544302539
1st Edition
Authors: Heidi M. Neck, Christopher P. Neck, Emma L. Murray
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