Suppose the MD = E and MAC = 15 - E/2 but after innovation it is possible to operate with MAC N = 12 - E. There is currently no regulation in the...

Suppose the MD = E and MAC = 15 - E/2 but after innovation it is possible to operate with MAC N = 12 - E. There is currently no regulation in the industry. Find the firm's incentive to innovate. Suppose the regulation is such that firm's must abate to E SE (with automatic updating as discussed in lecture). What is the additional incentive to innovate now?

Please show all work including graphs. Thanks.