Question

wey both followed a maximin strategy? In 2015, the Alberta government announced as the emissions cap. The government plans factories in Alberta by either setting an emissions (per megatonnes of carbon); however, the governmen abatement costs, which may be high (MCI) or low (MC ed its climate leadership plan, the plan known plans to regulate carbon emissions of chemica sions standard or imposing an emissions fee government is uncertain as to the marginal MC] = 15M + 500 MC2 = 15M - 500 where M is the units of carbon abated. The governmen is of carbon abated. The government believes there is a 50% chance on Cuch of the marginal abatement costs. The marginal benefit of abatement is MB = 1500 - 10M. a. What is the optimal level of emissions for each of the cost curves above? What is the expected marginal abatement cost (equation)? That is the optimal emissions standard according to the expected abatement costs? That is the optimal abatement fee according to the expected abatement et

Answer 1

Page No. 1 for high My . optimal level willet where MC MC = 15M+500 MB = 1500-10M 15M+500 = 1500/oM 25M = 1000 M = 40 for high me, optimal level of enessonsho for low Mc 15M-5002 1500-/om 25M = 2000 M = 80 for low Me optimal level of enession is 80.

My = 15M+50 My = 75M-500 - Мl HMG expteteel Marginal abertembutusta equations 15M+500 +15M-Joo - 15m Me=15M optimal level at MC=MB ML = 15M MB² 150o-lor 15m= 180o-lom 20m= 1500 M = 60 h optimal level of abatement M260 MC= 15m TC = 7.5m² abatement fee = 7.5x60x60 = 27,000