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![Q:
The main advantage of tradable pollution
permits over Pigovian taxes is that...
they raise more revenue.
they impose less of a burden on consumers.
they ensure the desired level of pollution
reduction.
they are easier to administer.
they lead to less price volatility.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F826637b3-1c35-411c-bba5-b5f444fd4226%2F15e3d6c8-bbdb-4eb2-99c9-a852b00f792a%2F64f7yy8_processed.jpeg&w=3840&q=75)
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- Firms in a polluting industry can be classified in two groups: newer Örms with a cleaner technology that can abate pollution at a lower marginal cost M CLA L = (1/2) aL and older Örms with dirtier M CAH = aH , where ai is the level of abatement undertaken by firms of type i = L,H. The social marginal benefit of abating pollution from this particular industry is MBA = 120 - A, where A is the aggregate level of abatement in that industry: (a) To design an efficient emissions standard, the government needs to determine which is the efficient abatement allocation (aL; aH ). In order to do this, obtain a cost e§ective abatement allocation (aL;aH) that provides an aggregate abatement level A = a*L , a*H and then proceed to determine the efficient level A * (Hint: You should obtain that MCA = A/3).Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost M CLA L = (1/2) aL and older Örms with dirtier M CAH = aH , where ai is the level of abatement undertaken by firms of type i = L,H. The social marginal benefit of abating pollution from this particular industry is MBA = 120 - A, where A is the aggregate level of abatement in that industry: (a) To design an efficient emissions standard, the government needs to determine which is the efficient abatement allocation (aL; aH ). In order to do this, obtain a cost e§ective abatement allocation (aL;aH) that provides an aggregate abatement level A = a*L , a*H and then proceed to determine the efficient level A * (Hint: You should obtain that MCA = A/3).The government auctions off 500 units of pollution rights. They sell for 50 dollars per unit, raising total revenue of 25,000 dollars. The policy is equivalent to a corrective tax of _____ per unit of pollution 1. 10 dollars 2. 50 dollars 3. 450 dollars 4. 500 dollars
- Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost MCLA = (1/2)aL and older firms with dirtier MCHA = aH, where ai is the level of abatement undertaken by firms of type i = L, H. The social marginal benefit of abating pollution from this particular industry is MBA= 120 - A, where A is the aggregate level of abatement in that industry. What Pigouvian tax t will implement the efficient allocation (aL, aH)? Is the resulting allocation an efficient allocation? What is the government's tax revenue?Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost MCLA = (1/2)aL and older firms with dirtier MCHA = aH, where ai is the level of abatement undertaken by firms of type i = L, H. The social marginal benefit of abating pollution from this particular industry is MBA= 120 - A, where A is the aggregate level of abatement in that industry. Suppose that in order to avoid the costly obtention of disaggregate information about individual firms' costs, the government just implements a uniform standard aui = A* / 2. Is this allocation efficient? If not, what is the deadweight loss?Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost MCLA = (1/2)aL and older firms with dirtier MCHA = aH, where ai is the level of abatement undertaken by firms of type i = L, H. The social marginal benefit of abating pollution from this particular industry is MBA = 120 - A, where A is the aggregate level of abatement in that industry. Suppose instead that the government uniformly allocates tradable emissionís permits. What abatement allocation will prevail after the permits are traded among firms? Is this allocation efficient?
- Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost MCLA = (1/2)aL and older firms with dirtier MCHA = aH, where ai is the level of abatement undertaken by firms of type i = L, H. The social marginal benefit of abating pollution from this particular industry is MBA= 120 - A, where A is the aggregate level of abatement in that industry. To design an efficient emissions standard, the government needs to determine which is the efficient abatement allocation (aL, aH). In order to do this, obtain a cost effective abatement allocation (aL, aH)that provides an aggregate abatement level A = aL + aH, and then proceed to determine the efficient level A (Hint: You should obtain that MCA = A=3)Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost M CLA L = (1/2) aL and older firms with dirtier M CAH = aH , where ai is the level of abatement undertaken by firms of type i = L,H. The social marginal benefit of abating pollution from this particular industry is MBA = 120 - A, where A is the aggregate level of abatement in that industry: 1. What Pigouvian tax t will implement the efficient allocation (aL; aH )? Is the resulting allocation an efficient allocation? What is the government’s tax revenue? 2. Suppose that in order to avoid the costly obtention of disaggregate information about individual firms cost, the government just implements a uniform standard aui = A*/2. Is this allocation efficient? If not, what is the deadweight loss?Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost M CLA L = (1/2) aL and older firms with dirtier M CAH = aH , where ai is the level of abatement undertaken by firms of type i = L,H. The social marginal benefit of abating pollution from this particular industry is MBA = 120 - A, where A is the aggregate level of abatement in that industry: 1. What Pigouvian tax t will implement the efficient allocation (aL; aH )? Is the resulting allocation an efficient allocation? What is the government’s tax revenue? 2. Suppose that in order to avoid the costly obtention of disaggregate information about individual firms cost, the government just implements a uniform standard aui = A*/2. Is this allocation efficient? If not, what is the deadweight loss? 3. Suppose instead that the government uniformly allocates tradable emission’s permits. What abatement allocation will prevail after the…
- Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.It is popular view in economic and legal literature that grandfathering or emission trading is inconsistent with polluter pays principle. True FalseFocusing on cases in which transaction costs prevent the existence of a private market for pollution abatement rights, address the following issues: Describe revealed preference, hedonic pricing and other used by regulators in order to gain insight about the social benefits of pollution abatement.
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