Suppose the the government has set the trading price of a permit at $474 per permit.
Complete the following table with the action each firm will take at this permit price, the amount of pollution each firm will eliminate, and the amount it
costs each firm to reduce pollution to the necessary level. If a firm is willing to buy two permits, assume that it buys one permit from each of the
other firms. (Hint: Do not include the prices paid for permits in the cost of reducing pollution.)
Firm
Firm
A
Firm
Firm
с
B
Initial Pollution Permit
Allocation
(Units of pollution)
2
2
2
Action
Final Amount of Pollution
Eliminated
(Units of pollution)
Cost of Pollution
Reduction
(Dollars)