ECN437Combining Marginal Abatement Cost Curves

ECN437Combining Marginal Abatement Cost Curves - ECN437...

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Unformatted text preview: ECN437 Combining Marginal Abatement Cost Curves When a pollutant has several sources, each with a different marginal abatement cost curve, finding the efficient amount of pollution requires combining these curves to find an overall marginal cost curve for pollution abatement. At first it may not be obvious how to do that but actually it's just like finding the market supply curve from a bunch of individual marginal cost curves. In fact, you can think of a firm's marginal abatement cost curve as its supply curve for pollution abatement. The overall marginal abatement cost curve is the horizontal sum of the individual abatement cost curves just as the supply curve is the horizontal sum of the marginal cost curves of different firms. To see how this works, suppose a pollutant comes from three firms with the following marginal cost curves for pollution abatement:...
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This note was uploaded on 04/05/2012 for the course ECN 437 taught by Professor Peterwilcoxen during the Spring '12 term at Syracuse.

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ECN437Combining Marginal Abatement Cost Curves - ECN437...

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