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Assume the marginal cost of pollution is given by MC=Q, where Q denotes the quantity of...

Assume the marginal cost of pollution is given by MC=Q, where Q denotes the quantity of pollution measured in % on a scale from 0 to 100. The marginal cost of reduction (MCR) is given by MCR=1. Refer to the Coase Theorem and calculate the optimal quantity of pollution AND the welfare gain that results from trade (compared to a pollution of zero or of 100, resp.) when

  1. there is an exclusive property right to clean air and

  2. there is an exclusive property right to polluting the air.

(note that Q ranges from zero to 100)

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