The Following (Incomplete) Payoff Table Depicts the Net Benefits to the United

The following (incomplete) payoff table depicts the net benefits to the United States and the European Union (EU) of reducing carbon emissions. Carbon quantities are in billions of tons and monetary amounts are in billions of dollars. For the United States, the marginal benefit, MB, is $40 for each ton reduced; for the EU, MB = $50 per ton. Each side benefits regardless of who reduces the emissions. For instance, if the EU reduces emissions by 0.6 billion tons and the U.S. does nothing, the US enjoys a benefit of (40)(0.6) = $24 billion, as indicated in the table. For the U.S., the marginal cost (MC) of reducing emissions is $60 per ton; for the EU, MC = $70 per ton.
$\begin{array} { | c | c | c | } \hline & 0 \text { tons } & 6 \text { tons } \\\hline 0 \text { tons } & 0,0 & 24 , ? \\\hline .4 \text { tons } & ? , 20 & ? , ? \\\hline\end{array}$ $\begin{array} { | c | c | c | } \hline & 0 \text { tons } & .6 \text { tons } \\\hline 0 \text { tons } & 0,0 & 24 , ? \\\hline .4 \text { tons } & ? , 20 & ? , ? \\\hline\end{array}$ (a) Complete the missing entries in the table by computing each side's net benefit. (Net benefit is simply total benefit minus total cost and can be positive or negative).
(b) Determine the (Nash) equilibrium outcome when each side acts independently of the other (state the reduction each side will choose in equilibrium). Is this a prisoner’s dilemma? If the two sides were able to negotiate an emissions agreement, what would be the likely outcome?
(c) Alternatively, suppose the U.S. and the EU allot permits allowing the holder to release carbon emissions, (where the total amount of permits sets the maximum amount of carbon emissions a region can produce). Some commentators urge that the two sides go beyond the 1 billion ton total reduction indicated in the table. Would this increase overall social net benefits? Explain briefly. (Provide a qualitative answer).
(d) Currently, the US and the EU release approximately equal total emissions, and each would receive a total permit allocation proportionally less than its current level, that is, the U.S. and EU might be provided permits equal to 70% (or some other percentage) of their pre-permit emission levels. Do you expect there to be permit trades between the US and the EU? If so, which side will be buying (selling) permits? Explain.