Question

The marginal abatement (control) costs for two air pollutants
sources that affect a single receptor are MAC_{1} = $0.6
q_{1} and MAC_{2} = $1.0q_{2}, where q1 and
q2 are emissions abated. Their respective transfer coefficients are
a_{1} = 3.0 and a_{2} = 2.0. Without any control,
they would each emit 20 units of emissions each. The ambient
standard is 24 ppm.

I. If an ambient permit system were established, how many permits would be issued and what price would prevail?

II. How much would each source spend on permits if they were auctioned off?How much would each source ultimately spend on permits if each source were initially given free of charge, exactly half of the total permits?

Answer #1

Two polluting firms can control emissions of a pollutant by
incurring the following marginal abatement costs: MAC1 = $300?1,
and MAC2 = $100?2 where ?1, and ?2 are the amount of emissions
abated (i.e., pollution controlled) by firm 1 and firm 2
respectively. Assume that with no abatement of emissions at all,
firm 1 would release 15 units of pollution and firm 2 would release
10 units, for a total of 25 units. Assume the target level of
abatement is...

Two polluting firms emit 200 tons of SO2 each, with
Marginal Abatement Costs given by MAC1= 2X1
and MAC2= 3X2, respectively. Xi
represents the level of abatement for each firm i, in
tons. The government wants to reduce total SO2 emissions
by 30% and decides to impose a uniform cap on emissions, with each
firm receiving 140 allowances for free (firms don’t pay for
allowance).
What is the market price of SO2 abatement?
How many permits are traded between firms,...

Two firms can control emissions at the following marginal
abatement costs. ?? 1= 200?1 and ??.2 = 100?1, where q1 and q2 are,
respectively the amount of emissions abated for firm 1 and firm 2.
Assume that with no control at all each firm would be abating 20
units of emissions or a total of 40 units for both firms. a)
Calculate the marginal cost for abating 20 units of emissions for
each firm. b) Calculate the cost-effective allocation of...

Suppose two point sources are discharging phosphorus into
Wisconsin’s Fox River and face the following abatement costs for
this pollutant:
Point Source 1: TAC1 = 500 + 0.35(A1)2 MAC1 = 0.7A1
Point Source 2: TAC2 = 750 + 1.05(A2)2 MAC2 = 2.1A2,
where A1 and A2 represent the abatement of phosphorus effluents
in pounds by Source 1 and Source 2, respectively, and TAC and MAC
are measured in hundreds of dollars.
Assume that the state environmental authority has set the...

Please answer E only
. Below are the marginal abatement costs from two different
sources. They currently emit 100 tons each.
A. What would the total abatement cost
be for an equiporportional cutback to a total of 100 tons?
B. Suppose we issue 10 transferable
permits, each entitles the firm to 10 tons of emissions. They are
distributed equally to both sources. What are the final emissions
each of the two sources?
C. What are the total abatement costs...

Two polluting firms emit 200 tons of SO2 each, with
Marginal Abatement Costs given by MAC1= 2X1 and MAC2= 3X2,
respectively. Xi represents the level of abatement for each firm i,
in tons.
The government wants to reduce total SO2 emissions by
30% and decides to impose a uniform cap on emissions, with each
firm receiving 140 allowances for free (firms don’t pay for
allowance).
a) In a first moment assume polluters are not allowed to
trade, so each firm...

1. Consider the problem of two polluting sources in the region,
each of which generated 10 units of pollution for a total of 20
units released into the environment. The government determined that
emissions must be reduced by 12 units across the region to achieve
the ”socially desirable level of pollu- tion”. Each firm faces
different abatement cost conditions modelled as follows: for
Polluter 1, marginal abatement cost is MAC1 = 26- 2.6E1. For
Polluter 2, marginal abatement cost is...

In this situation there are two independent firms, each emitting
15 units of pollutants into the environment for a total of 30 units
in their region. The government imposes an abatement standard of 15
units. The polluter’s cost functions are as follows: TAC1 = 5 +
0.75(A1)^2 and MAC1 = 2A1 and TAC2 = 5 + 0.5(A2)^2 and MAC2 = A2,
where A is units of abatement undertaken by a firm
a. Suppose that the government mandates each company to...

(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 = 35 − 0.5Q What is the efficient level of
abatement?
(d) What is the relationship between cost-effectiveness and
efficiency? (e) What pollution tax would yield the efficient level
of abatement you found in part (c)? If the pollution charge is
levied on all units of emissions, how much revenue would the
government receive?
(f)...

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