(a) Assume that two companies emit a specific pollutant. The marginal cost reduction of pollution of company 1 is MC₁ = 600q₁ while the corresponding marginal cost for company 2 is MC₂ = 200q₂ [where q₁ and q₂ are the quantities of pollutant emissions reduced by the first and second company, respectively]. Without government intervention, company 1 produces 100 units of pollution and company 2 produces 90 units of pollution.

(i) Assume that regulators decide that total pollution should be reduced by 100 units. How much should each company reduce the pollution it produces, if we want the reduction to be done in the most cost-effective way?

(ii) Calculate the emission fee that must be imposed in order to achieve the cost-effective result. What will be the tax burden of each company in this case?