(d) Another option for the government is to give each firm a number of pollution permits such...
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(d) Another option for the government is to give each firm a number of pollution “permits” such that the total number of permits equals the desired amount of pollution, 104, and then let the two firms trade the permits between one another. Suppose the government allocates each firm 52 pollution permits. Derive the demand, the supply and the equilibrium price of the pollution permits.
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