ssuming that firms hold well-defined rights to pollute and identifying (marginal) benefits and costs of pollution abatement, argue that a private market for abatement services is unlikely to exist when such services are a public good, defining relevant technical concepts as part of your answer. Illustrate your discussion in the context of an example in which the private marginal benefit of abatement to each one of 1000 victims of pollution is MBA = 0.020 (constant) and the marginal cost to polluting firms is MCA = A. (Hint: Obtain the abatement level private markets would provide and the socially efficient abatement level, obtaining first the marginal social benefit of abatement to the group of pollution victims).
Assuming that firms hold well-defined rights to pollute and identifying (marginal) benefits and costs of pollution abatement, argue that a private market for abatement services is unlikely to exist when such services are a public good, defining relevant technical concepts as part of your answer. Illustrate your discussion in the context of an example in which the private marginal benefit of abatement to each one of 1000 victims of pollution is MBA = 0.020 (constant) and the marginal cost to polluting firms is MCA = A. (Hint: Obtain the abatement level private markets would provide and the socially efficient abatement level, obtaining first the marginal social benefit of abatement to the group of pollution victims).
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