1. Quantitative problem Create a professional looking table to present your results:

PLEASE FILL IN TABLE AS WELL

Command & Control vs. Cap & Trade	Policy & Price
	Command/Control	Trading (P=$4,000)	Trading (P=$8,000)
Permits issued by Gov. (Cap)
Market Price
Total Abatement
MC(A)
Permits Bought (Sold)
Final Emissions
Total Abatement Cost
Trade costs (revenues)
Total Policy Cost

Assume the following:

Company XYZ is currently emitting 5,000 tons of pollution

A new policy states that XYZ now has the right to emit at most 3,500 tons.

For XYZ the MC(A)= 4*A

a) Without trading emission rights, if XYZ meets the policy then calculate A, MC(A) and the TAC.

b) XYZ is able to buy or sell their rights to emit. If the market price of a permit to emit 1 ton is $4,000 calculate the following for XYZ:

a. the level of abatement and emissions

b. the MC(A) and TAC

c. the number of permits bought or sold

d. the revenue or expense of exchanging permits

e. the net cost for XYZ

c) XYZ is able to buy or sell their rights to emit. Calculate the following if the market price of 1 ton is $8,000.

a. the level of abatement and emissions

b. the MC(A) and TAC

c. the number of permits bought or sold

d. the revenue or expense of exchanging permits

e. the net cost for XYZ