11:373:101 Lecture Notes - Lecture 13: Edmund Muskie, Marginal Cost, Opportunity Cost
22 Oct 2016
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12: coping with market failure: policies for the environment (part ii) We cannot give anyone the option of polluting for a fee --senator edmund muskie: eliminate pollution (virtually impossible, allow firms to pollute for free. Brewery/glass/paper exercise using marketable permits: if the gov"t requires marketable permits for so2 and gives you 2 permits each, what should your company do if the market price is. Answer: yes: brewery is willing to pay up to for the two additional permits, paper and glass factory are both willing to sell one permit for or greater.
