Home » Two coal-fired power plants compete to provide electricity to a certain region.

Two coal-fired power plants compete to provide electricity to a certain region.

Two coal-fired power plants compete to provide electricity to a certain region. Each plant has a marginal cost of $2 per megawatt (q) of electricity produced, and market demand for electricity is Q = 50 − p. 1. Find the Cournot equilibrium price and quantity for each firm. 2. Suppose that each megawatt of electricity produced at plant 1 results in 3 tons of pollution, while each megawatt of electricity produced at plant 2 results in 6 tons of pollution. Further suppose that each ton of pollution causes an externality damage of $1. What is the total externality damage in the Cournot equilibrium? 3. Suppose that the government forces plant 1 to pay an extra $3 per megawatt of electricity produced in taxes in order to pay for each ton of pollution they emit, while plant 2 pays no taxes. Find the new Cournot equilibrium price and quantities, and calculate the new externality damage. 4. Suppose that the pollution tax is levied on plant 2 instead ($6 per megawatt), while plant 1 pays no taxes. Find the new Cournot equilibrium and externality damages. 5. Calculate the Cournot equilibrium price and quantities and externality damages if both firms pay $1 for each unit of pollution emitted. 6. Suppose that coal plants competed in prices rather than quantities. How would the results change in each case in problems 1-5 above?

Show more







Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10