Smog Corporation and Grimy Corporation Emit Pollution in Their Production

question 95

Essay

Smog Corporation and Grimy Corporation emit pollution in their production processes.The local government has established a standard for the pollution levels of Smog Corporation and Grimy Corporation of 25,000 units of pollution.To ensure this level of pollution,the government has allocated 15,000 pollution permits to Smog Corporation and 10,000 pollution permits to Grimy Corporation.Smog Corporation has the following demand function for pollution emission permits:
ε_M = 15,000 - .Grimy Corporation's demand function for pollution emission permits is:
ε_G = 13,000 - .Is the government's allocation of pollution permits efficient? If the government allowed the corporations to trade permits,would the firms be motivated to trade? If so,what would be the efficient level of trading?

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Definitions:

Keeping One

Ensuring the retention or preservation of a particular thing or situation.

Relationship Selling

Forming meaningful relationships with your customers, which makes them much more likely to return and buy from you again.

Return And Buy

A consumer behavior where customers return a previously purchased product and then proceed to make another purchase.

Unethical Customer Service

Practices in customer service that are morally wrong, often disregarding the well-being or rights of the customer.