2 - 26/01/201020:14:00 Technologicalsolutions

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26/01/2010 20:14:00 Technological solutions     Engineers presented technologies to reduce pollution, but they were not adopted:  Set target level of abatement     leave firms to decide how to meet it Different firms have different MC: thus need different quantity regulations => too  hard, so gov does it uniformly Uniform level: higher aggregate costs (not efficient) Price regulation     like Pigouvian tax, but tax on pollution (per unit): passed to consumer Each firm decides how to abate       Aggregate “cap”: fixed number of permits (force everyone to total A*) Allocation may be inefficient, but sums up to efficient # of permits/ level of A Tradable permits for pollution Firms will price permits differently based on their individual MC; then trade  permits amongst themselves to get to efficiency Trading allows firms to equalize their marginal cost of abatement
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2 - 26/01/201020:14:00 Technologicalsolutions

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