Consider the regulation of J local monopolies for different goods with inverse demand functions P j (X
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Consider the regulation of J local monopolies for different goods with inverse demand functions Pj(Xj) and cost functions Cj(Xj,ej). Social damage depends on total pollution and is given by a convex damage function D(E).
(a) Derive an expression for the second-best tax to jointly regulate the J local monopolists.
(b) Show that such a system is equivalent to a system of tradable permits.
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Related Book For
A Course In Environmental Economics
ISBN: 9781316866818
1st Edition
Authors: Daniel J Phaneuf, Till Requate
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