Two companies dump waste into a pond. They can reduce their waste (abate). The Marginal Cost of Abatement for factory A is 10+2X, and for factory B is 5 + X, where X is the amount of pollutants that have been abated. The local gov't has opted for a Cap and Trade policy. The cap effectively requires the firms to reduce total pollution by 30 units. Permits are issued to A and B such that A will have to abate by 10 units and B will have to abate by 20 units.

1. if trade of permits is not allowed, what will be the costs of abatement for each firm
2. If trade of permits is allowed, we know the firms will buy/sell permits until their marginal costs are the same. What will this ultimate marginal cost be?
3. What will the total cost of abatement be after the trade of the permits?
4. If we assume that all permits are bought/sold at the marginal cost found in #2, what will be the net abasement costs for each firm?