Q4-6 Feldstein argued that the 2009 permit proposal would have had little impact on world greenhouse gas (GHG) emissions.It would have reduced US emissions by about 15% and US emissions were about 25% of world emissions.So it would have reduced world emissions by only 25% of 15% or by about 4%.

a. Why might the proposed permit system have raised US total surplus significantly even if it reduced world GHG emissions by only 4%?

b. Why might the proposed permit system have led to a much bigger than 4% drop in world GHG emissions even if it reduced US emissions by only 15%?