Marginal abatement cost curve, Macroeconomics

Assignment Help:

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.

 

 

2134_marginal abatement cost curve.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.

 


Related Discussions:- Marginal abatement cost curve

Cost curves, the difference between the AC and the AVC curve

the difference between the AC and the AVC curve

Recent article in the cincinnati enquirer, A recent article in the Cincinna...

A recent article in the Cincinnati Enquirer reported that the mean labor cost to repair a heat pump is $90 with a standard deviation of $22. Montes plumbing and Heating Service com

Input combination if the price of capital decreased, In reference to the ab...

In reference to the above question, assume you know the combination of inputs that minimizes cost. What would happen to this input combination if the price of labor increased? What

Per year interest rate, For an interest rate of 12% per year compounded con...

For an interest rate of 12% per year compounded continuously, find (a) the nominal rate per year, (b) the nominal rate per quarter, (c) the effective rate per quarter, and (d) the

#title.Functions of money., #qDiscuss the functions of money Illustrate you...

#qDiscuss the functions of money Illustrate your answeruestion..

Describe wage and employment for healthcare workers, Analyze how a model of...

Analyze how a model of the labor market can be used to explain wage and employment for healthcare workers.

Investment multiplier, what is the formula for calculating investment multi...

what is the formula for calculating investment multiplier for 4 sector economy?

Accounting profit-economic profit of present value, 1. Christopher has $200...

1. Christopher has $200,000 to invest, and he is considering the following business opportunity. He would use his $200,000 to buy a mechanical self-service car wash. He'll earn $40

How not to justify say''s law, At first, Say's Law may seem 'obvious'. Thou...

At first, Say's Law may seem 'obvious'. Though, it's not - actually, it's highly controversial. The reason it may seem obvious is that you have perhaps learned from microeconomics

Calculate the production with antitrust laws, The following Table summarize...

The following Table summarizes the profits of two firms as a function of their capacity investments levels (you can also interpret these levels as the quantities they produce):

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd