Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 11-2E_1 MAC_2= 8.5E_2, and assume marginal external damages (MED) from the aggregate emissions of both firms (E_Agg = E_1 + E_2) is: MED= .5E_Agg. To achieve the socially efficient level of aggregate emissions (E*_Agg), the government institutes a per unit tax on emissions. The per-unit tax on emissions is $ Answer:

Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 11-2E_1 MAC_2= 8.5E_2, and assume marginal external damages (MED) from the aggregate emissions of both firms (E_Agg = E_1 + E_2) is: MED= .5E_Agg. To achieve the socially efficient level of aggregate emissions (E*_Agg), the government institutes a per unit tax on emissions. The per-unit tax on emissions is $ Answer:

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

Problem 8QP

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