Two businesses, a factory and an airline, each emit 40 tonnes of carbon pollution. In an effort to reduce pollution, the government will now require businesses to have a pollution permit to emit carbon. In this economy, these are the only businesses that emit carbon. Each business receives 20 pollution permits and they can use it to pollute or sell it to the other business (but lose the ability to pollute). To reduce pollution it costs the airline $200 per tonne of pollutant eliminated and it costs the factory $50 per tonne of pollutant eliminated. Once the two businesses have traded these permits with each other, what is the likely outcome?

1) the factory emits 20 tonnes of pollutants and the airline emits 20 tonnes of pollutants. 2)the factory no longer pollutes, and the airline will not lower the amount it pollutes.3)the factory raises its pollution, and the airline will lower how much it pollutes.