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Q. there are three Industrial firms in Happy Valley.
Firm Initial Pollution Level Cost of reducing pollution A 70 units by 1 unit B 80 units $ 20 C 50 units $ 25 $ 10
government wants to reduce pollution to 120 units, so it Provides each firm 40 tradable pollution permits.
a. Who sells permits and Explain how many do y sell? Who buys permits and Explain how many do y buy? Briefly explain why sellers and buyers are each willing to do so. Illustrate what is total cost of pollution reduction in this situation?
b. Explain how much higher would cost of reduction be if permits could not be tradable?
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