Homework 6 - 1. 2. 3. 4. 5. Homework6 Economics4545...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1. 2. 3. 4. 5. Homework6 Economics4545 DueWednesdayNovember12 Explainthedifferencesbetweenlocal,regional,andglobalpollutants.What istheimpactofthesedifferencesonpublicpolicytocontrolthesepollutants? Whywouldafocusonlocalairpollutionleadtoincreasedregionaltransport ofacidrainprecursorpollutants? Assumethatyouaredealingwithaverysmallcountrywithonelake,one electricutility,and1000peoplewhofishonthelake.Totaldemandfortrips (T)dependsontravelcosts(TC)andcatchperday(CPD)whichisgivenby T=20TC/10+11*CPD.Totalmarketdemandforpower(MWH)asafunction ofprice(P)isMWH=100,0001000P.Higherpowerplantemissionslower thecatchperday.Anewregulationincreasesthepriceofelectricityfrom$7 to$8/MWHbutincreasesthecatchperdayfrom5to10.Ifall1000people havetravelcostsof$10pertrip,isthisagoodpolicy?Whyorwhynot? Explainhowapollutiontaxortradablepollutionpermitsystemcancutdown oncostsofachievingaspecifiedreductioninpollutionrelativetoacommand andcontrolapproachthatsimplydictatesallfirmstoreducebythesame amount. Supposethatreducingpollutionislumpyinthesensethattotal(not marginal)costsofreducingpollutionlooklikeanincreasingstepfunction. ThatisweinstallcontroltechnologyAandweimmediatelyreducepollution by100units.Wecannotreduceanythinglessthan100units.Tomove beyond100unitsreductionwehavetodoublethetechnologyanddoublethe totalcosts.Againwecanonlymovein100unitreductionblocks.Iftwo firmshavecontroltechnologieslikethis,explainhowataxversustradable emissionmightresultinconsiderablydifferentcompliancecostsoversome emissionsreductionstargets. ...
View Full Document

This note was uploaded on 12/11/2008 for the course ECON 4545 taught by Professor Edwardmorey during the Fall '08 term at Colorado.

Ask a homework question - tutors are online