Question

We know that China is one of the most polluted countries. The marginal abatement cost and marginal social cost of pollution in the Beijing area are as follows:

Pollution is measured in metric tons of sulfur dioxide.

Pollution	Marginal Abatement cost	Marginal Social Cost
10	1000 yuan	0
20	800	0
30	600	50
40	500	100
50	400	200
60	300	300
70	150	500

Find the socially efficient level of pollution, and explain how a marketable permit scheme can achieve an efficient outcome.

How many permits should be issued?