Who will sell and buy permits, Business Economics

Assignment Help:

There are three industrial firms in a quaint town of South Orange where the municipal government wants to reduce pollution to 120 units from uncontrolled level of 210 units. Three firms have constant marginal abatement costs as shown in the table below.

Suppose that the municipal government is to pass an environmental standards law that limits each firm to 40 units of pollution.
(a) What will be the abatement costs for firm A, B, and C? What will be the total abatement costs of the

571_22.png

three firms?

(b) Firm C has an opportunity to make R&D investment to lower marginal abatement cost by $2 (so marginal abatement cost will be $8). How much does it pay for this R&D investment at most?

Suppose instead that the municipal government issues 40 pollution permits to each firm, each entitling firms to one unit of pollution, and that these permits can be traded.

(c) Who will sell and buy permits? How many permits will be traded? What will be the unit price of the permit?

(d) What will be the abatement costs for firm A, B, and C (do not include payments for permits)? What will be the total abatement cost of three firms?

(e) Firm C has an opportunity to make R&D investment to lower marginal abatement cost by $2 (so marginal abatement cost will be $8). How much does it pay for this R&D investment at most?


 


Related Discussions:- Who will sell and buy permits

Important to the success, Brand names can be important to the success of a ...

Brand names can be important to the success of a firm in some industries. Consider industries that demonstrate monopoly, monopolistic competition, oligopoly, and perfect competitio

Explain about the long-run economic growth, Explain about the long-run econ...

Explain about the long-run economic growth. Long-Run Economic Growth: Secular or long-run growth is the continued upward trend into aggregate output per person over many

Is low savings a problem, Is low savings a problem? Countries along wi...

Is low savings a problem? Countries along with low savings are caught into the vicious circle of poverty: there low savings, implies low investment low productivity therefore

Explain critics of the international monetary fund argue, Explain critics o...

Explain critics of the International Monetary Fund argue. Critics of the International Monetary Fund (IMF) argue: • The IMF is suffering through mission creep and requiremen

Illustrate liberalise or open up trade market for promoting, Illustrate lib...

Illustrate liberalise or open up trade in market for promoting development? Liberalise or open up trade implies that: • Abandoning fixed exchange rates and elimination of re

Quantitative Methods for Business, Please turn in the linear program for th...

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

What are capacity building policies, What are capacity building policies? ...

What are capacity building policies? Capacity building policies: Capacity building is the development and improvement of institutions. And Capacity building policies as

Week 2, In your own words, describe the meaning of average cost. You normal...

In your own words, describe the meaning of average cost. You normally buy a crate of wine for $75. One crate has 6 bottles of wine. After a month, the store clerk informs you that

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