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here are two power generating firms A and B in a country Elec-land. Carbon will emitted W generating process. Current level of carbon emissions is
"here are two power generating firms A and B in a country \"Elec-land\". Carbon will emitted W generating process. Current level of carbon emissions is 150 forth and 1m for El. Marginal cost of carbon emission reduction for two rms are as follows. :ch = 3a,; + 30 HF; =2q + 20 where q is the amount carbon emission reduction. Marginal benet of emissions reduction is estimated to be ME = 200- 2g To reduce the carbon emission, a government is considering emission fee or cap-and-trade scheme. {a} What is the socially optimal level of emissions reduction? (D) W fee is set at 120, what is the amount of emissions reduction? to) Under the cap-andtrade system, emission permits will be equally distributed between two rms. To achieve the same emission reduction as emission fee in question b, what shoutd be the total number of emission permits distributed? What would be the price of emission permits it they are competitively traded? . .tppose a new technology reduces the marginal cost of pollution reduction by 30. rm A Is oered the Implementation of this technology with the cost of X. We 113.13. nissions fee of 120 as in question b. {d} Without this technology, what are rm A's total cost of emission reduction and emission fee payment? {Assume that there is no xed cost.)
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