Consider firms abatement cost functions C j (e j )=(a j b j e j ) 2
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Consider firms’ abatement cost functions Cj(ej)=(aj−bjej)2/2bj and an ambient damage function D(A)=δA2/2, where is the ambient pollution level.
(a) Determine the optimal emission level.
(b) Determine the optimal ambient tax and the optimal ambient tax/subsidy scheme.
(c) Determine an optimal collective lump-sum fine, where all firms have to pay a fixed fine F if some ambient pollution threshold is exceeded.
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Related Book For
A Course In Environmental Economics
ISBN: 9781316866818
1st Edition
Authors: Daniel J Phaneuf, Till Requate
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