Consider the theoretical model about combatting climate change in the international arena where consumption of country i (i=1,...n) is given by xi=yi-Di, where production equals yi=ci*(ei).5 damages equal Di=di*e and e denotes the sum of the emissions ei over all n countries i=1,...,n. Here ci and di denote country specific positive constants. A) Characterize the globally economically efficient emission levels, denoted by ei*, (that is, consumption maximizing emission levels for all countries combined) that a social planner would pick.

B) Given the emission levels of the other countries, derive the nationally economically efficient emission level, denoted by ei' (that is, consumption maximizing emission levels for that country).

C) Show that ei* is not bigger than ei'.

D) Describe intuitively for which countries it is particularly costly (in terms of consumption loss) to implement ei* rather than ei'.

E) Discusssomeoftheshortcomingsofthatmodelasamodelforinternational cooperation in the face of climate change. What important aspects of climate change does the model cover? .5 .5 [Hint: recall that the derivative of the square root (ei) is given by 1/(2(ei) ).]