Two polluting firms can control emissions of a pollutant by incurring the following marginal abatement costs MAC $300 10E and MAC $90 5E Assume the target level of pollution is 30 units We do not know if this is the socially efficient level or not (20 points) a Suppose a uniform standard system is put in place to achieve a total emissions level of 30 units Is this a cost effective standard and does a deadweight loss arise Why or why not Show and explain your answer both graphically and algebraically b Explain how a tradable emission permit system could be applied to achieve the target level of emissions Assume the regulator initially assigns 15 permits to each polluter The government gives these permits to the firms without charge Solve for the number of permits each firm holds after a permit market operates and the equilibrium price of the permits Two polluting firms can control emissions of a pollutant by incurring the following marginal abatement costs MAC $300 10E and MAC $90 5E Assume the target level of pollution is 30 units We do not know if this is the socially efficient level or not (20 points) a Suppose a uniform standard system is put in place to achieve a total emissions level of 30 units Is this a cost effective standard and does a deadweight loss arise Why or why not Show and explain your answer both graphically and algebraically b Explain how a tradable emission permit system could be applied to achieve the target level of emissions Assume the regulator initially assigns 15 permits to each polluter The government gives these permits to the firms without charge Solve for the number of permits each firm holds after a permit market operates and the equilibrium price of the permits

Question

Two polluting firms can control emissions of a pollutant by incurring the following marginal abatement costs  MAC   $300   10E and MAC   $90   5E   Assume the target level of pollution is 30 units  We do not know if this is the socially efficient level or not  (20 points) a  Suppose a uniform standard system is put in place to achieve a total emissions level of 30 units  Is this a cost effective standard and does a deadweight loss arise  Why or why not  Show and explain your answer both graphically and algebraically  b  Explain how a tradable emission permit system could be applied to achieve the target level of emissions  Assume the regulator initially assigns 15 permits to each polluter  The government gives these permits to the firms without charge  Solve for the number of permits each firm holds after a permit market operates and the equilibrium price of the permits  Two polluting firms can control emissions of a pollutant by incurring the following marginal abatement costs  MAC   $300   10E and MAC   $90   5E   Assume the target level of pollution is 30 units  We do not know if this is the socially efficient level or not  (20 points) a  Suppose a uniform standard system is put in place to achieve a total emissions level of 30 units  Is this a cost effective standard and does a deadweight loss arise  Why or why not  Show and explain your answer both graphically and algebraically  b  Explain how a tradable emission permit system could be applied to achieve the target level of emissions  Assume the regulator initially assigns 15 permits to each polluter  The government gives these permits to the firms without charge  Solve for the number of permits each firm holds after a permit market operates and the equilibrium price of the permits

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Two polluting firms can control emissions of a pollutant by incurring the following marginal abatement costs: MAC = $300 - 10E and MAC: =$90 -

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