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Two plants are emitting NOx into the air and emissions are currently uncontrolled and no abatement has occurred. The two plant owners maximize profits. Because
Two plants are emitting NOx into the air and emissions are currently uncontrolled and no abatement has occurred. The two plant owners maximize profits. Because the air circulates throughout the region, the precise location where this pollutant is emitted is not relevant to the level of damages observed. NOx is therefore a uniformly mixed pollutant. The Oregon Department of Environmental Quality decides to require reductions of 100 tons of NOx per day. Abatement costs can be approximated by continuous marginal cost functions. Suppose therefore that plant X has marginal abatement costs of MACx = 10 + 1.5x, with total abatement costs equaling TACx = 10x + 0.75x2, where x is the level of NOx abatement of plant X. Plant X is currently polluting 150 tons. Plant Y has marginal abatement costs of MACy = 60 + y and total abatement costs of TACy = 60y + 0.5y2, where y is the level of NOx abatement in tons of plant Y. Plant Y currently pollutes 125 tons. 1. (0.5%) Suppose regulators know the marginal abatement costs of each plant. What is the cost effective pollution abatement of each plant if total abatement must equal 100? What is the industry total abatement
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