Question
In: Economics
Two firms (firm 1 and firm 2) can control pollution with the following marginal abatement costs:...
Two firms (firm 1 and firm 2) can control pollution with the following marginal abatement costs:
MAC1=100q1
MAC2=200q2
where q1 and q2 are the amount of pollution reduced by the first and second firms. Assume that with no controls at all, each firm would be emitting 100 units of pollution, or 200 units for both firms.
Suppose that the government sets up an emissions trading market mechanism to achieve a pollution goal of 100 units of total pollution. The government would issue 100 emissions permits. Each permit represents the right to emit one ton of emissions. The government then freely allocates 50 permits to each firm. In the emissions trading market, who will buy permits? How many permits the buyer will buy?
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Rahul Sunny answered 2 years agoRelated Solutions
Two firms (firm 1 and firm 2) can control pollution with the following marginal abatement costs:...
Two firms (firm 1 and firm 2) can control pollution with the
following marginal abatement costs:
MAC1=100q1
MAC2=200q2
where q1 and q2 are the amount of pollution
reduced by the first and second firms. Assume that with no controls
at all, each firm would be emitting 100 units of pollution or 200
units for both firms.
Suppose that the government sets up an emissions trading market
mechanism to achieve a pollution goal of 100 units of total
pollution. The government...
Two firms (firm 1 and firm 2) can control pollution with the following marginal abatement costs:...
Two firms (firm 1 and firm 2) can control pollution with the
following marginal abatement costs:
MAC1=100q1
MAC2=200q2
where q1 and q2 are the amount of pollution
reduced by the first and second firms. Assume that with no controls
at all, each firm would be emitting 100 units of pollution, or 200
units for both firms.
Suppose that the government sets up an emissions trading market
mechanism to achieve a pollution goal of 100 units of total
pollution. The government...
1. Two firms can reduce pollution at the following marginal abatement costs: MC1 = 12Q1 MC2...
1. Two firms can reduce pollution at the following marginal
abatement costs: MC1 = 12Q1 MC2 = 4Q2 where Qi is the abatement
(pollution control) of firm i = 1, 2. In the absence of regulation,
each firm would emit 40 units of emissions. Assume that each firm’s
objective is to minimize its compliance costs
(c) The aggregate marginal cost function for this two-firm
industry is: MC = 3Q Suppose the marginal benefit of pollution
control is given by: MB...
There are two firms, firm A and firm B. Their marginal abatement costs are MCA =...
There are two firms, firm A and firm B. Their marginal abatement
costs are MCA = 4AA and MCB = AB, where AA and AB are the tons of
emissions abated by firm A and B, respectively.
a. Calculate the total cost if each firm is required to abate 50
tons of emissions.
b. Would this policy be cost effective and why?
c. What if the government set the total abatement to be 100 tons
with tradable allowances, what is...
Firm A Firm B Emissions Total abatement costs Marginal abatement costs Emissions Total abatement costs Marginal...
Firm A
Firm B
Emissions
Total abatement costs
Marginal abatement costs
Emissions
Total abatement costs
Marginal abatement costs
4
0
0
4
0
0
3
1
1
3
2
2
2
3
2
2
6
4
1
6
3
1
12
6
0
10
4
0
20
8
1. What are the total abatement costs for the firms and economy
to reduce 50% of the emissions with command and control
policies?
2. How will cap and trade improve the situation,...
Suppose that two polluting firms have marginal abatement costs given by the following equations: MAC1 =...
Suppose that two polluting firms have marginal abatement costs
given by the following equations:
MAC1 = 50 – 5e1 and MAC2 = 40 – 4e2
where e1 and e2 are the emission levels of each firm
respectively. The regulator’s goal is to reduce total pollution
from the two firms to 8 units.
a) Suppose that the regulator requires that each firm reduce
their emissions to 4 units (i.e. they use a uniform standard).
Compute each firm’s total abatement costs under...
Let us assume the following regarding 2 firms: Firm A Firm B Emissions Total abatement costs...
Let us assume the following regarding 2 firms:
Firm A
Firm B
Emissions
Total abatement costs
Marginal abatement costs
Emissions
Total abatement costs
Marginal abatement costs
4
0
0
4
0
0
3
1
3
2
2
2
2
4
1
3
1
6
0
4
0
8
1 Please calculate the total abatement costs for both firms (see
empty boxes in the table above, what are the corresponding
values?)
2 What are the total abatement costs for the firms...
Two firms are ordered by the federal government to reduce their pollution levels. Firm A's marginal...
Two firms are ordered by the federal government to
reduce their pollution levels. Firm A's marginal costs associated
with pollution reduction is MC = 20 + 4Q. Firm B's marginal costs
associated with pollution reduction is MC = 10 + 8Q. The marginal
benefit of pollution reduction is MB = 400 –40. a. What is the
socially optimal level of each firm's pollution reduction? b.
Compare the social efficiency of three possible outcomes: (1)
require all firms to reduce pollu-...
a. Assume that a society is composed of two polluters, with the marginal abatement costs of...
a. Assume that a society is composed of two polluters, with the
marginal abatement costs of polluters 1 and 2, respectively, equal
to:
MAC1 = 18 – E1
MAC2 = 12 – 2E2
Where MAC1 refers to the marginal abatement costs of polluter 1,
and E1 refers to the level of emissions of polluter 1. What is the
unregulated level of pollution for each polluter? Find the total
level of emissions that would be generated if a per-unit pollution
tax...
Assume that you have two firms that face marginal abatement cost functions of ???1 = 4.5?...
Assume that you have two firms that face marginal abatement cost
functions of ???1 = 4.5? and ???1 = 2.5?, where A is units of
abatement undertaken by a firm. Both companies can sell up to two
units of output and each unit of output generates one unit of
pollution. The price for each unit of output is $12.00 that yields
a revenue of $24 dollars per period. Each company is required to
hold a permit for each unit of...
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