The EPA proposes to cap emissions of ground-level ozone promoting emissions in both Illinois and Pennsylvania to no more than 6000 tons per year by 2026. While the rule proposes to require equal emissions from both states, it is particularly harsh on Pennsylvania, which currently emits 12,000 tons of ground-level ozone promoting pollutants, while Illinois only emits 8000 tons of these pollutants presently (Emissions data slightly changed to make your calculations easier.) This is to say that Pennsylvania will need to abate 6,000 tons of ground-level ozone-promoting compounds by 2026, while Illinois only has to abate 2,000 tons of these same pollutants. While the proposed rule caps emissions (at 6000 tons for each state), it does not include a provision that would allow there to be trades among states affected by the proposed rule Assume that, at present, neither Illinois nor Pennsylvania presently restrict any ozone-promoting emissions. Furthermore, assume that the marginal abatement cost functions associated with reducing ozone-promoting emissions for Illinois and Pennsylvania, are MAC(Illinois) = 1.5A(Illinois) MAC (Pennsylvania)=1.0 A(Pennsylvania) where A represents tons of VOC-promoting emissions abated by each state. 1. Absent any trading mechanism, what will be the cost to Pennsylvania of of complying with the proposed rule? (Do not use
The EPA proposes to cap emissions of ground-level ozone promoting emissions in both Illinois and Pennsylvania to no more than 6000 tons per year by 2026. While the rule proposes to require equal emissions from both states, it is particularly harsh on Pennsylvania, which currently emits 12,000 tons of ground-level ozone promoting pollutants, while Illinois only emits 8000 tons of these pollutants presently (Emissions data slightly changed to make your calculations easier.) This is to say that Pennsylvania will need to abate 6,000 tons of ground-level ozone-promoting compounds by 2026, while Illinois only has to abate 2,000 tons of these same pollutants. While the proposed rule caps emissions (at 6000 tons for each state), it does not include a provision that would allow there to be trades among states affected by the proposed rule Assume that, at present, neither Illinois nor Pennsylvania presently restrict any ozone-promoting emissions. Furthermore, assume that the marginal abatement cost functions associated with reducing ozone-promoting emissions for Illinois and Pennsylvania, are MAC(Illinois) = 1.5A(Illinois) MAC (Pennsylvania)=1.0 A(Pennsylvania) where A represents tons of VOC-promoting emissions abated by each state. 1. Absent any trading mechanism, what will be the cost to Pennsylvania of of complying with the proposed rule? (Do not use
Chapter1: Making Economics Decisions
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Transcribed Image Text:The EPA proposes to cap emissions of ground-level ozone promoting emissions in both Illinois and Pennsylvania to no more than
6000 tons per year by 2026. While the rule proposes to require equal emissions from both states, it is particularly harsh on
Pennsylvania, which currently emits 12,000 tons of ground-level ozone promoting pollutants, while Illinois only emits 8000 tons of
these pollutants presently. (Emissions data slightly changed to make your calculations easier.) This is to say that Pennsylvania will
need to abate 6,000 tons of ground-level ozone-promoting compounds by 2026, while Illinois only has to abate 2,000 tons of these
same pollutants.
While the proposed rule caps emissions (at 6000 tons for each state), it does not include a provision that would allow there to be
trades among states affected by the proposed rule.
Assume that, at present, neither Illinois nor Pennsylvania presently restrict any ozone promoting emissions. Furthermore, assume
that the marginal abatement cost functions associated with reducing ozone-promoting emissions for Illinois and Pennsylvania, are
MAC(Illinois) = 1.5* A(Illinois)
MAC(Pennsylvania) = 1.0 A(Pennsylvania)
where A represents tons of VoC-promoting emissions abated by each state.
1. Absent any trading mechanism, what will be the cost to Pennsylvania of of complying with the proposed rule? (Do not use
commas or dollar signs.)
Answer
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