Suppose polluters collectively emit 800 tons of SO2 , MD = 0.25eT, and MACagg = 1.75aT.

a. At what levels should policy makers set the targets for emissions and abatement, if they are using an efficiency criterion to drive their decision?

b. How would your answer to part a change if policy makers' target-setting criterion were instead one of trying to choose targets in a way that equates the total cost paid by abaters and the total damages suffered by society? (Note: Calculations are not necessary to answer part b.)

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a To set the targets for emissions and abatement using an efficiency criterion we need to find the l... View the full answer