Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 11 - 2E_1 MAC_2 = 12 - E_2, and assume marginal external damages (MED) from aggregate emissions from the two firms (E_Agg = E_1 + E_2) is: MED = E_Agg. The socially efficient level of aggregate abatement is ____. (Recall that abatement is how much firms cut back their emissions relative to the no government intervention case)
Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 11 - 2E_1 MAC_2 = 12 - E_2, and assume marginal external damages (MED) from aggregate emissions from the two firms (E_Agg = E_1 + E_2) is: MED = E_Agg. The socially efficient level of aggregate abatement is ____. (Recall that abatement is how much firms cut back their emissions relative to the no government intervention case)
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 6QFR
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Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E):
MAC_1 = 11 - 2E_1
MAC_2 = 12 - E_2,
and assume marginal external damages (MED) from aggregate emissions from the two firms (E_Agg = E_1 + E_2) is:
MED = E_Agg.
The socially efficient level of aggregate abatement is ____.
(Recall that abatement is how much firms cut back their emissions relative to the no government intervention case)
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