The authorities institute an emission charge , Business Economics

A critically important criterion that must be considered in evaluating environmental policies is whether they provide strong incentives for people to find new ways to improve ambient environment. Below is a simple model economy of a single pollutant-emitting firm, which has a marginal abatement cost curve (MAC), to discuss the advantages and disadvantages of various policies. MAC1 indicates the current MAC curve and MAC2 and MAC3 refer to the ones realized when the firm spends some resources (money) in an R&D effort to develop better technologies.

1645_22.png

(a) Suppose that the authorities set an emission standard to reduce emissions from the uncontrolled level of 60 units to 48 units. What are the highest possible R&D investment costs to realize MAC2 and MAC3 respectively?

(b) Suppose, instead, the authorities institute an emission charge and the firm emits 48 units of pollutant with MAC1 under the charge. What are the highest possible R&D investment costs to realize MAC2 and MAC3 respectively?

(c) Suppose, instead, the authorities institute a transferable emission permits program and the firm emits 48 units of pollutant with MAC1 under the program. What are the highest possible R&D investment costs to realize MAC2 and MAC3 respectively?

(d) Some would argue that the incentives for R&D investment under command and control approach are weaker than the answers in part (a). Explain why this is the case by considering the expected behavior of the regulating authorities.

 

Posted Date: 3/14/2013 3:15:29 AM | Location : United States







Related Discussions:- The authorities institute an emission charge , Assignment Help, Ask Question on The authorities institute an emission charge , Get Answer, Expert's Help, The authorities institute an emission charge Discussions

Write discussion on The authorities institute an emission charge
Your posts are moderated
Related Questions
Problem 1: (a) Suppose the government decides to implement a minimum wage to help low-income workers. How will the minimum wage affect the demand for labor and what does this i

explain ththe test marketing approaches followed by fmcg companys

definition of money markets

Please turn in the linear program for the following problem. No need to solve the LP. Exercise 3 (Multi-Period Fixed Income Capital Budgeting) As part of the settlement for a class

how can a community having water shortages issues be resolved using marginal utility and consumer behaviour



A  transition economy is Moving from a planned to a mixed or free market economy.

Discuss about the free market economy in short. Free market economy: Households own resources and markets assign resources throughout the price mechanism. An increase wi

Question 1: The triple concepts-  globalisation, good governance and democracy-  have largely dominated international discourse since a long time.  (a) Briefly explain the ter