A monopolist produces a good x and pollution

Reference no: EM13857796

A monopolist produces a good x and pollution as a by-product. The production of x units of the good generates x gross emission units (i.e. E_G= x). Assume the existence of an abatement technology that can reduce emissions by an arbitrary amount 0 ≤ ER_x (≤ E_G). Hence, net emissions are given by E = E_G - ER_x.

Environmental damages are assume to be given by D(E) = 5E². The marginal private cost function and the inverse demand function are assumed to be given by MPC(x) = 10 and P(x) = 110 - 5x. Marginal abatement cost by application of the abatement technology are given by MAC(ER_x) = 5ER_x.

Determine the socially optimal gross and net emission level E_G^** and E^**
Determine the unregulated equilibrium emission level, E_M
To induce the socially optimal emission level E^**, the government considers charging an emission tax. Determine the appropriate tax level t_M and the corresponding gross emission and abatement level of monopolist.

Reference no: EM13857796

Questions Cloud

Forensic and investigative accounting : List some of the criminal activities that fall under the mantle of cybercrime. For instance, (Cybercrime is a fast-growing area of crime. More and more criminals are exploiting the speed, convenience and anonymity of the Internet to commit a diverse ..

A rancher and a farmer are located next to each other : A rancher and a farmer are located next to each other. Here are the facts of their situation: There is no fence between the ranch and the farm The cattle enter the farmer's fields and destroy $300 worth of corn each year. The rancher's business is w..

About creative leadership : The Chinese philosopher, Tsang Sin said, “What a man dislikes in his superiors, let him not display in his treatment of his inferiors”. What is the message in this saying to you about creative leadership?

Calculate labour productivity before and after equipment : A firm that makes shopping shelfs for supermarkets and other stores recently purchased some new equipment that reduces the labour requirements (hours) of the jobs needed to produce the shopping shelfs. Calculate labour productivity before and after t..

A monopolist produces a good x and pollution : A monopolist produces a good x and pollution as a by-product. The production of x units of the good generates x gross emission units (i.e. EG = x). Assume the existence of an abatement technology that can reduce emissions by an arbitrary amount 0 ≤ E..

Generalizing the wittman model : Generalizing the Wittman Model Consider the following generalization of the Wittman model. There are two parties A and B. Party A is o?ce seeking, that is, its payo? is v > 0 if it wins the election and 0 otherwise. Party B is policy seeking and has..

The solution to a recessionary gap : According to the Keynesian Model, the solution to a recessionary gap or an inflationary gap is the same. Change the level of aggregate demand. True or False. Explain Why?

Find how much transmit power is required : Consider a point-to-point radio link between two highly directional antennas in a stationary environment. The antennas have antenna gains of 30 dB, distance attenuation is 150 dB, and the receiver has a noise figure of 7 dB. The symbol rate is 20 ..

Why do companies expand into foreign markets : Why do companies expand into foreign markets? What are some cross-country differences must companies expanding into foreign markets must navigate?

User Account

All Pages