Suppose that there are only two polluters in a society. If left uncontrolled, polluter 1 emits 85 units of a pollutant, while polluter 2 emits 15 units. The polluters' marginal abatement costs are MAC1= 0.25a1 and MAC2=2a2. Policy makers have established that 28 units is the level to which emissions of the pollutant should be reduced. Determne the abatement responsibilities that should be assigned to each polluter in order to minimize total compliance cost. Illustrate with graphs. (thats all info question gave us)
Suppose that there are only two polluters in a society. If left uncontrolled, polluter 1 emits 85 units of a pollutant, while polluter 2 emits 15 units. The polluters' marginal abatement costs are MAC1= 0.25a1 and MAC2=2a2. Policy makers have established that 28 units is the level to which emissions of the pollutant should be reduced. Determne the abatement responsibilities that should be assigned to each polluter in order to minimize total compliance cost. Illustrate with graphs. (thats all info question gave us)
Chapter14: Environmental Economics
Section: Chapter Questions
Problem 7SQ
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