two types of consumers( workers an retirees) share a community with a polluting cheese factory. the polution is nonrival and nonexcludable. the total damage to workers is p2 where p is the amount of pollution and the total damage to retirees is 3p2 . thus marginal damage to workers is 2p and marginal damage to retirees is 6p. according to an anlaysis by consulting engineers, the cheese factory saves 20p-p2 by pollluting p, for a marginal savings of 20-2p. a.Find the aggregate(including both types of sonsumers) marginal damage for the public bad. b..graph the marginal savings and aggregate marginal damage curves with pollution on the horizontal axis. c. how much will the cheese factory pollute in the abscence of any regulation or bargaining? what is the societys optimal level of pollution? d. starting from the uncontrolled level of pollution calculated in part(c), find the marginal willingness to pay for pollution abatment, A, for each consumer class. (abatment is the reduction in pollution; zero abatement would be associated with the unctrolled level of pollution.) find the aggregate marginal willingness to pay for abatement. e. again starting from the unctrolled level of pollution, what is the firms marginal cost of pollution abatement? what is the potimal level of A? f. are the problems of optimal provision of the pulic bad(pollution) and the ppublic good(abatement) equivalent. Explain why or why not
two types of consumers( workers an retirees) share a community with a polluting cheese factory. the polution is nonrival and nonexcludable. the total damage to workers is p2 where p is the amount of pollution and the total damage to retirees is 3p2 . thus marginal damage to workers is 2p and marginal damage to retirees is 6p. according to an anlaysis by consulting engineers, the cheese factory saves 20p-p2 by pollluting p, for a marginal savings of 20-2p.
a.Find the aggregate(including both types of sonsumers) marginal damage for the public bad.
b..graph the marginal savings and aggregate marginal damage
c. how much will the cheese factory pollute in the abscence of any regulation or bargaining? what is the societys optimal level of pollution?
d. starting from the uncontrolled level of pollution calculated in part(c), find the marginal willingness to pay for pollution abatment, A, for each consumer class. (abatment is the reduction in pollution; zero abatement would be associated with the unctrolled level of pollution.) find the aggregate marginal willingness to pay for abatement.
e. again starting from the unctrolled level of pollution, what is the firms marginal cost of pollution abatement? what is the potimal level of A?
f. are the problems of optimal provision of the pulic bad(pollution) and the ppublic good(abatement) equivalent. Explain why or why not
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