Recent debate about climate change has highlighted the need to reduce carbon

emissions. Some countries have chosen to do by creating regulations that mean that

all firms must reduce emissions by the same amount. The cost to each of two firms (A

and B) of reducing their emissions is shown in the table below. Use this data to help you

explain how a given level of emission reduction (say 6 units) can be better achieved

using a market-based incentive than using the direct regulation.