3. The marginal control cost curves for two air pollutant sources are given by MCC 500q...
Suppose two companies emit a particular pollutant. The marginal cost of reducing business pollution 1 is MC1 = 400q1 while the corresponding marginal cost for business 2 is MC2 = 100q2 (where 1 q and 2 q are the quantities of pollutant emissions that the first and second companies reduce, respectively) . Without government intervention, enterprise 1 generates 100 pollution units and enterprise 2 generates 80 pollution units. Cost effective allocation of pollution reduction requires that MC1=MC2 400q1=100q2 4q1=q2 Regulation...
Efficiency through Emissions Taxes Consider two firms that emit a uniformly mixed air pollutant (e.g., carbon dioxide). The marginal abatement cost functions for Firm 1 and Firm 2 are (subscripts indicate firms): MAC1 = 100 - 2e1 MAC2 = 100 - 0.50e2 Aggregate emissions for the industry are denoted as E = e1 + e2. The marginal damage function is: MD = 0.40E [1] Write out the aggregate marginal abatement cost (AMAC) function for the industry. Hint: solve the MAC curves...
Application 16.0 Cost-effective Gunk Control Two plants are emitting a uniformly mixed pollutant called gunk into the beautiful sky over Tourist-Town. The city government decides that it can tolerate total emissions of no more than 100 kgs of gunk per day. Plant G has marginal reduction costs of 100-4x, and is currently polluting at a level of 25, while plant K has marginal reduction costs of 150-y, and currently pollutes at a level of 150. (x and y are the...
Suppose that two firms emit the same chemical pollutant when producing good X. The marginal cost of reducing pollution for each firm is as follows: MAC1 = 30 + 5Z1 and MAC2 = 15 + 20Z2, where Z is the amount of pollution reduction. The marginal social benefit (MSB) of total pollution reduction is MSB = 500 – 5ZT, where ZT = Z1 + Z2. How much pollution reduction does each firm should contribute in order to achieve the allocative...
2. There are only two polluting sources in the region, each of which generates 10 units of pollution for a total of 20 units released into the environment, The government determines that emissions must be reduced by 12 units across the region to achieve the "socially desirable level of pollution". Each firm faces different abatement cost conditions modelled as follows: for Pol- luter 1, marginal abatement cost is MAC1-2.6Q1, while the total abate- ment cost is TAC1 1.3(Q1)2. For Polluter...
Two thermic power plants have the following marginal and total cost of abatement of nitrogen oxide (NOx) emissions. When faced with no restrictions each of them emits maximum 100 ppm (parts per million) of NOx. Firm 1: MAC1=5 A1 TAC1=2.5 (A1)^2 Firm 2: MAC2 = 10 A2 TAC2= 5(A2)^2 (8 pts) The EPA finds the total NOx emissions of 200 ppm too much and seeks for improvement in air quality by specifying the reduction of 40% in total emissions from...
For questions (2) and (3) suppose the government imposes an emission standard on the firms requiring Firm 1 to reduce emissions by 30 tons and Firm 2 to reduce emissions by 20 tons. Question 2 10 pts Does the emission standard bring about a cost-effective allocation of pollution control responsibility? Yes NO Question 3 10 pts Calculate the total cost of pollution control for Firm 1 and for Firm 2. TCC1 - $ TCC2 = $ rvices Consider an industry...
Consider two firms (i.e., firms 1 & 2) with heterogeneous marginal abatement cost functions: MAC1=12 - 2E1 MAC2 =10 - E2 Assume the marginal external damages from emissions are: M E D = 1/2 E A . where EA is the sum of the two firms’ emissions. What quantity of emissions do firms produce in the absence of government intervention? What are the total external damages? What are the total abatement costs? Derive the aggregate marginal abatement cost function (Hint:...
Consider two firms (i.e., firms 1 & 2) with heterogeneous marginal abatement cost functions: MAC1 =12−2E1MAC2 =10−E2. Assume the marginal external damages from emissions are: M E D = 12 E A . where EA is the sum of the two firms’ emissions. What quantity of emissions do firms produce in the absence of government intervention? What are the total external damages? What are the total abatement costs? Derive the aggregate marginal abatement cost function (Hint: This will be a...
Question 06: Cost-effectiveness There are two companies that emit 600 tons of volatile organic compounds (VOCs) each; together, the utilities emit a total of 1200 tons of VOCs annually. The government has decided to set a limit for VOC emissions of 600 tons per year. Source A is a chemical manufacturer. Source B is a bakery with fewer political connections. Their MAC curves (as functions of their output levels) are a) What emission levels be assigned to each firm to...