Consider two polluting firms with cost functions C j (x j ,e j ). The inverse demand
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Consider two polluting firms with cost functions Cj(xj,ej). The inverse demand function is P(X). Firms engage in negotiations about the permit allocation and a transfer price in a first stage and engage in Cournot competition in the second stage. Derive a condition describing how the firms will trade the permits. Show that marginal abatement costs will eventually not be equal in general.
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Related Book For
A Course In Environmental Economics
ISBN: 9781316866818
1st Edition
Authors: Daniel J Phaneuf, Till Requate
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