urope, Southern Europe and the United Kingdom. Each region had three technologies to abate. The marginal cost of abatement for each unit, and the number of pollution units that is able to be pated using a given technology, are indicated below for each region and each technology. Countries may use either all or part of a given abatement technology. Technology 1 Technology 2 Technology 3 orthern Europe $5 (10 units) $9 (25 units) $15 (10 units) outhern Europe $4 (15 units) $5 (5 units) $8 (10 units) nited Kingdom $2 (20 units) $3 (10 units) $7 (5 units) ) Under a uniform abatement program in which each region abates 25 units, what are the total costs for each region? Under a least cost abatement program of abating 75 units in total what are the total costs for each region?
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- Economists sometimes shock noneconomists by stating that they do not favor the complete elimination of pollution. Explain the rationale for this position.There are two towns, A and B, each with a plant emitting pollution. The emission from plant Ais uniformly distributed across both town A and B. The emissions from plant B are local to town B. Despite the difference in affected area, the marginal benefit to either town of abating one unit of pollution from either source is the same, MB(Qi) = 17 − Qi per person, where Qi is total emissions abated from town i’s air. The marginal cost of abatement at plants A and B are MCA(qA) = 200qA and MCB(qB) = 100qB, respectively. If town A has 300 citizens and town B has 200, what is the efficient tax to set at each plant?two types of consumers( workers an retirees) share a community with a polluting cheese factory. the polution is nonrival and nonexcludable. the total damage to workers is p2 where p is the amount of pollution and the total damage to retirees is 3p2 . thus marginal damage to workers is 2p and marginal damage to retirees is 6p. according to an anlaysis by consulting engineers, the cheese factory saves 20p-p2 by pollluting p, for a marginal savings of 20-2p. a.Find the aggregate(including both types of sonsumers) marginal damage for the public bad. b..graph the marginal savings and aggregate marginal damage curves with pollution on the horizontal axis. c. how much will the cheese factory pollute in the abscence of any regulation or bargaining? what is the societys optimal level of pollution? d. starting from the uncontrolled level of pollution calculated in part(c), find the marginal willingness to pay for pollution abatment, A, for each consumer class. (abatment is the reduction in…
- An important question in economics is how to minimize the total cost of pollution reduction (called the abatement cost, which is considered a "cost to society"). Two companies, Fim 1 and Firm 2, each emit 10 units of pollution per year. The table below shows the total cost for each company to reduce its pollution to a given value x. Due to technology differences, is more expensive for Fim 2 to reduce pollution than for Firm 1. When x = 10, no abatement has occurred (it is "business as usual"); when x = 0, no pollution is emitted. The table also shows an algebraic formula for each abatement cost. (BTW, it is a common economic approximation that abatement cost goes up quadratically.) Below, we solve this for two firms, but the method is applicable to a situation with multiple firms. Per-firm pollution emissions x Firm 1 total abatement cost = (10-x) where x is the amount of pollution Firm 2 total abatement cost = (20-2x) where x is the amount of pollution 1. 3. 4. 9. 7. 8. 6. 10 100 81…Combating emissions that lead to global warming differs from other types of pollution abatement because the process of combating global warming is _____ cumulative. long run and short run and long run and not short run and notSuppose marginal damages due to industrial chlorine emissions e into a river system are defined by the equation MD = e. Assume that marginal abatement costs also are linear in the emission level: 1200 – e/2 for e<2400 MC = otherwise (a) Calculate the pollution level in the absence of any regulation. (b) Calculate the optimal level of pollution assuming it can be obtained costlessly. Now suppose there are transactions costs of altering pollution output equal to T = 500,000. Does the assignment of property rights now matter for efficiency? What is the optimal level of pollution taking account of the transactions costs? (c) Now suppose the marginal damage of chlorine release is e/4 instead of e. If the transactions and negotiation costs are as in (iii), what now would be the optimal level of pollution taking account of the transactions and negotiation costs? (d)
- There are 2 firms: Firm X and Firm Y. Firm X has the following cost to pollution reduction: MCx = 10 + 2Qx Firm Y has the following cost to pollution reduction: MCy = 4 + 4Qy Both firms currently produce 100 units of pollution, for a combined production of 200 units. The government has decided to reduce total pollution to 56 units. To do this, the government introduces 56 tradable permits, giving 28 to each firm. What is the equilibrium price of each permit?Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost MCLA = (1/2)aL and older firms with dirtier MCHA = aH, where ai is the level of abatement undertaken by firms of type i = L, H. The social marginal benefit of abating pollution from this particular industry is MBA= 120 - A, where A is the aggregate level of abatement in that industry. To design an efficient emissions standard, the government needs to determine which is the efficient abatement allocation (aL, aH). In order to do this, obtain a cost effective abatement allocation (aL, aH)that provides an aggregate abatement level A = aL + aH, and then proceed to determine the efficient level A (Hint: You should obtain that MCA = A=3)Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost MCLA = (1/2)aL and older firms with dirtier MCHA = aH, where ai is the level of abatement undertaken by firms of type i = L, H. The social marginal benefit of abating pollution from this particular industry is MBA= 120 - A, where A is the aggregate level of abatement in that industry. Suppose that in order to avoid the costly obtention of disaggregate information about individual firms' costs, the government just implements a uniform standard aui = A* / 2. Is this allocation efficient? If not, what is the deadweight loss?
- Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost MCLA = (1/2)aL and older firms with dirtier MCHA = aH, where ai is the level of abatement undertaken by firms of type i = L, H. The social marginal benefit of abating pollution from this particular industry is MBA = 120 - A, where A is the aggregate level of abatement in that industry. Suppose instead that the government uniformly allocates tradable emissionís permits. What abatement allocation will prevail after the permits are traded among firms? Is this allocation efficient?Both Wisconsin and Michigan border Lake Michigan. The lake is becoming polluted and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 – however, Wisconsin will receive only 1100 of those social benefits while Michigan will receive the other 400. If Michigan cleans the lake, it will cost them 700 and generate social benefits of 900 – however, Michigan will receive only 600 of those benefits while Wisconsin will receive the remaining 300. If a state does not clean the lake, it experiences a cost of $0. If Wisconsin does not clean the lake and Michigan does then the payoffs will be Question 9 options: A) Wisconsin gains 200, Michigan gains 100 B) Wisconsin gains 300, Michigan loses 100 C) Wisconsin gains 300, Michigan gains 100 D) Wisconsin gains 200, Michigan loses 100Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost MCLA = (1/2)aL and older firms with dirtier MCHA = aH, where ai is the level of abatement undertaken by firms of type i = L, H. The social marginal benefit of abating pollution from this particular industry is MBA= 120 - A, where A is the aggregate level of abatement in that industry. What Pigouvian tax t will implement the efficient allocation (aL, aH)? Is the resulting allocation an efficient allocation? What is the government's tax revenue?