The government wants to reduce water pollution (E) from a tannery. Currently, such abatement is very expensive, but engineers believe that a new cheaper technology is feasible.

The current marginal abatement cost curve (MAC₁) and potentially-lower MAC curve (MAC₂) for a single typical source (with current emission levels at E₀= 200) are:

MAC₁= 200 - E

MAC₂= 100 - E/2

Suppose the government sets an emission standard at E* = 100. What is the maximum the firm would be willing to pay to develop the new technology? (Assume that there is no ratchet effect)