Description of this paper

there is a trading program, suppose that a X company's objective

Description

solution


Question

there is a trading program, suppose that a X company's objective for 2 major firms in an urban area is a 16 precent reduction in carbon monoxide (CO) emissions and that each firm faces the following costs;firm1: TAC1 =1,000 + 2.5(A1)^2;MAC1 =5A1;firm2: TAC2 =500+1.5(A2)^2;where A1 and A2 represent the precentages of CO emission abatement achieved by firm1 and firm2, respectively, and TAC and MAC are measured in thousands of $s.;1- calculate the TAC and MAC for each firm if a uniform abatement standard were used.;2- based on the answer to part 1, is there an economic incentive in the trading program? explain.;3- quantify the cost savings associated with a cost-effective abatement allocation that could be achieved through trading?;4- at what price must each tradable permit be set to achieve the cost-effective solution?

 

Paper#21337 | Written in 18-Jul-2015

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