Suppose two countries with domestic cap-and-trade policies a…

Suppose two countries with domestic cap-and-trade policies are considering linking their two systems. Country A has a cap of 20 tons of emissions, a domestic marginal cost of abatement of $10, and an uncontrolled emissions level of 60 tons, while Country B has a cap of 40 tons, a domestic marginal cost of abatement of $1q, where q = the tons of emission abatement, and an uncontrolled emissions level of 80 tons. If these two markets were linked by allowing each country to buy from and sell allowances to the other, what would be the price for both countries?

Suppose that the marginal damages to society from air pollut…

Suppose that the marginal damages to society from air pollution are MD = e – 25, where e is the level of air pollution. Suppose also that the marginal cost of reducing the air pollution on the part of firms is MC = 200 – 2e.  Find the optimal level of pollution.  

Suppose there are two identical forest plots, except that on…

Suppose there are two identical forest plots, except that one will be harvested and left to regrow, while the second will be cleared after the harvest and turned into a housing development. In terms of efficiency, which one should have the oldest harvest age?

Suppose there are two firms that each emit 30 units of pollu…

Suppose there are two firms that each emit 30 units of pollution, and the State Pollution Board wants to reduce this level to a total of 20 units between both firms. They decide to allocate 10 permits to each firm, where each permit will allow 1 unit of emissions per permit.  Assume the following information, where TAC is total abatement cost and MAC is marginal abatement cost:  TAC1 = 100A12 MAC1=1.5A1 TAC2 = 50A22 MAC2=A2. If each firm keeps its 10 permits, how much will they each spend in total to reduce emissions?

Suppose two countries with domestic cap-and-trade policies a…

Suppose two countries with domestic cap-and-trade policies are considering linking their two systems. Country A has a cap of 20 tons of emissions, a domestic marginal cost of abatement of $10, and an uncontrolled emissions level of 60 tons, while Country B has a cap of 40 tons, a domestic marginal cost of abatement of $1q, where q = the tons of emission abatement, and an uncontrolled emissions level of 80 tons. Before linkage, what would be the price in Country A?