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Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 33 -3E_1 MAC_2 = 8 - 2E_2,
Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E):
MAC_1 = 33 -3E_1
MAC_2 = 8 - 2E_2,
and assume marginal external damages (MED) from the aggregate emissions of both firms (E_Agg = E_1 + E_2) is:
MED = 2E_Agg
In the absence of government intervention, total external damages (TED) are ____.
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