2. Suppose that emissions of sulfur dioxide are managed via a Cap-and-Trade policy. In this circumstance, how can an environmental group, such as Greenpeace, reduce emissions of this pollutant? Explain your answer. How would it effectively result in a reduction in emissions? What is the main obstacle for Greenpeace to achieve this? 3. Explain why a Cap-and-Trade program is more likely to be efficient than a standard. Be specific. 4. Explain why the firm’s MAC-curve is its demand curve for pollution permits.

2. Suppose that emissions of sulfur dioxide are managed via a Cap-and-Trade policy. In this circumstance, how can an environmental group, such as Greenpeace, reduce emissions of this pollutant? Explain your answer. How would it effectively result in a reduction in emissions? What is the main obstacle for Greenpeace to achieve this? 3. Explain why a Cap-and-Trade program is more likely to be efficient than a standard. Be specific. 4. Explain why the firm’s MAC-curve is its demand curve for pollution permits.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 13SCQ: A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals...

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How do taxes, pollution charges, and cap-and-trade work to reduce emissions? When a cap-and-trade is implemented _______.
1. Consider an emission tax and an emission standard as regulatory policies. a. Which policy, an emission tax or an emission standard, provides a greater incentive to the polluters to undertake research and development to reduce MAC? Assume the policy (that is, the tax rate or the standard), cannot be changed once the innovation has occurred. Illustrate your answer using any relevant diagrams. b. Now suppose the policy (that is, the tax rate or the standard), can be changed optimally by the government once the innovation has occurred. Show the optimal tax rates and emission standards before and after the innovation on your diagrams. Under this new assumption, which policy, an emission tax or an emission standard, provides a greater incentive to the polluters to undertake research and development to reduce MAC?
3. Suppose that air pollution is a problem. a. Describe a "cap and trade" policy as a possible solution b What, if any, externalities are addressed by this program. Include in your explanation whether these are positive or negative, and how the policy ameliorates them. c.What might be some drawbacks to this policy? Your answers to the above should be complete enough to answer the question. You can use verbal, graphical, mathematical explanations in your answer. Your answer to #3 a, should be at least 250 -500 words.
1. Discuss how pollution violates the justice or fairness that characterizes a competitive free market.
4. Question 4: How would you find the added abatement costs for Country A to consider damages it causes in Country B and produce at the globally efficient level of emissions? 5. Question 5: How could you assess the total reduction in damages when Country A considers damages it causes in Country B and produces at the globally efficient level of emissions? 6. Question 6: What is the total reduction in damages accruing directly to Country A when it considers the damages it causes in Country B and produces at the globally efficient level of emissions?
How do taxes, pollution charges, and cap-and-trade work to reduce emissions? Taxes and pollution charges _______.
Economists offer two major potential policies to reduce our greenhouse gas emissions: pollution taxes and cap-and-trade programs. Which do you think would be most effective at reducing emissions? Discuss the pros and cons of each, as well as the difference between the two policies.
The U.S. government has threatened to increase tariffs on European luxury automobiles because of a trade imbalance between the United States and the European Union. For American automakers like GM and Ford, this action would reflect Multiple Choice A. reactive strategy that would harm the technological environmental force. B. proactive maneuver to manipulate the social environmental force. C. positive result from regulatory environmental forces. D. positive response to a technological environmental force. E. negative impact as a result of adverse competitive, regulatory, and technological environmental forces
Suppose the following functions represent the marginal abatement cost (MAC) and marginal damage (MD) functions of an electricity generation plant emitting Sulphur Dioxide. MAC = 60 – 4E MD = 2E E represents the level of emissions, measured in tons per month. Currently, there is no emission control, and no abatement occurs.
How does the implementation of a cap-and- trade system for carbon emissions likely affect industrial innovation in green technology? A. It discourages innovation in green technology because of increased regulatory compliance costs. B. It has no impact on innovation in green technology. C. It encourages innovation in green technology by creating a financial incentive to reduce emissions. D. It leads to a decrease in overall industrial production, thus slowing innovation in all sectors.
. Both Wisconsin and Illinois border Lake Michigan. The lake is becoming polluted and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 – however, Wisconsin will receive only 1100 of those social benefits while neighbor Illinois will receive the other 400. If Illinois cleans the lake, it will cost them 700 and generate social benefits of 900 – however, Illinois will receive only 600 of those benefits, Wisconsin will receive the remaining 300. If a state does not clean the lake, it experiences a cost of $0. If both states clean the lake, the payoffs will be A. Wisconsin gains 100, Illinois gains 200B. Wisconsin gains 200, Illinois gains 300C. Wisconsin gains 200, Illinois loses 100D. Wisconsin gains 100, Illinois loses 100
With Diagram, show how external effects can change supply and demand in electricity generation.