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System of marketable pollution permits

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Suppose two firms operate under a system of marketable pollution permits. If it costs Firm A $25 to reduce pollution by 1,000 units per day, and Firm B can reduce costs by $35 by increasing pollution by 1,000 units per day

a. the firms cannot gain by trading the right to pollute.

b. both firms can benefit if Firm A trades the right to pollute 1,000 units to Firm B for $30.

c. both firms can benefit if Firm A trades the right to pollute 1,000 units to Firm B for $40.

d. both firms can benefit if Firm B trades the right to pollute 1,000 units to Firm A for $30.

Reference no: EM131288736

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