Physicians in the United States are used to dealing with hard-sell pharmaceutical sales reps. However, British and Japanese doctors respond more favorably to online informational presentations about new drugs that they can review whenever they have a few free minutes to spare. When PharmaGen decided to market their newest cardiovascular medicine in Britain, they spent three months developing the Internet material they would use to present the drug to British doctors. This is an example of pressure for local responsiveness based on:

4. suppose that pollution in a neighborhood comes from two factories, with marginal benefit curves given by mb1 = 12 – p1 and mb2 = 8 – p2. the level of pollution in the neighborhood is given by p = p1 + p2. the government wants to limit pollution by instituting a pollution-rights market. the government’s desired level of p is 10, so it prints 10 pollution rights and offers them for sale to the firms. a)find the equilibrium selling price of a pollution right, as well as the allocation of rights (and hence pollution levels) across the two factories. b)repeat part (a) for the case where the government’s desired level of pollution equals 14. c)comment on the usefulness of a pollution rights market in achieving efficient levels of pollution abatement.