With few exceptions, automobile emissions standards are imposed uniformly under the Clean Air Act, which leads to
Question:
With few exceptions, automobile emissions standards are imposed uniformly under the Clean Air Act, which leads to an inefficient outcome. Suppose a uniform abatement standard (AST) has been set for PM-10 at 50 units. Also assume that the following are the MSC and MSB functions for New Jersey (NJ) and Montana (MT), where each is measured in millions of dollars. (The MSC is the same for both states because mobile source abatement is not location-specific.)
MSBNJ = 54 ‒ 0.2A
MSCNJ = MSCMT = 20 + 0.2A
MSBMT = 32 – 0.3A
a. Evaluate the MSB and MSC for each region at the uniform abatement standard. What do the relative values imply about the over- or under-regulation of each region?
b. Support your result in part (a) by comparing the uniform standard to the efficient abatement level for each state.
Step by Step Answer:
a MSB NJ 54 0250 44 million MSC NJ MSC MT 20 0250 30 mill...View the full answer
Environmental Economics and Management Theory, Policy and Applications
ISBN: 978-1111826673
6th edition
Authors: Scott J. Callan, Janet M. Thomas
