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Author Question: Two companies in the same town must decide whether to pollute. Choosing to pollute means the company ... (Read 187 times)

redpassion

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on: Nov 23, 2022
Two companies in the same town must decide whether to pollute. Choosing to pollute means the company will increase revenue, but they will also face higher medical costs because workers get sick more frequently.
• If company A pollutes and B does not, then company A increases revenue by $60 million, but incurs additional medical costs of $45 million and company B incurs additional medical costs of $45 million.
• If company B pollutes and A does not, the company B increases revenue by $60 million, but incurs additional medical costs of $45 million and company A incurs additional medical costs of $45 million.
• If neither company pollutes, both companies earn zero profits
• If both companies pollute, both companies increase revenue by $60 million, but both companies also incur additional medical costs of $90 million.
What is the outcome if both companies do what is in their own best interest? Is this outcome socially optimal?
◦ company A pollutes and company B does not, yes
◦ company B pollutes and company A does not, no
◦ neither company pollutes, yes
◦ both companies pollute, no
Macroeconomics ¦ Acemoglu, Laibson, List ¦ 3rd Edition
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Marked as best answer by redpassion on Nov 23, 2022

kalimarie

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Reply #1 on: Nov 23, 2022
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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redpassion

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Reply 2 on: Nov 23, 2022
Great answer, keep it coming :)

tranoy

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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