There are two firms in the economy, Firms is Producing steel and its cost function is : CS ( s , x ) = s
There are two firms in the economy, Firms is Producing steel and its cost function is : CS ( s , x ) = s X Where s is the amount of steel produced and X is the amount of pollution Produced by Firms. The maximum possible amount of pollution is x =2 and the minimal possible amount of pollution is x = 0.1 Firm F is producing Fish and its cost function is: Cf ( f , x ) = f - x Where f is the amount of fish caught. Suppose that initially Firm F [Instead of Firms] has the control of Pollution. The output prices are Ps =ff = 1 state the profit-maximization Problems of the firms and Firm F 2. ) Find the optimum choices by t,s, x by firm I and firm s 3.) Solve for the social optimum f, s, x
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