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Unformatted text preview: Review Session Notes 1) Approaches to Pollution Abatement In class we discussed three major regulatory approaches for achieving pollution abatement. Define each, and indicate what information is needed in order to use each mechanism to achieve least costs in a setting where firms have different marginal abatement. Command and Control: to achieve least ocsts you need to know the marginal abatement costs function (MAC) of each firm and the total level of abatement, A, desired. Taxes: industry MAC and A Tradable Pollution Permits: A 2) Optimal Abatement Levels and Allocation Suppose that in a certain airshed the benefits of abating SO 2 (a precursor to acid rain) emissions were given by the following marginal abatement benefits function, MAB = 85 – $1*A where A represents the total level of abatement. Assume that there are two pollution source (firms C and D) in the airshed, with the following marginal abatement cost functions associated with different technologies (1,2,…6) that each of the firms could use. technologies (1,2,…6) that each of the firms could use....
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This test prep was uploaded on 02/01/2009 for the course AEM 2500 taught by Professor Poe,g. during the Fall '07 term at Cornell University (Engineering School).
- Fall '07