Provide an example of an environmental tax

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1.Provide an example of an environmental tax or marketable permit instrument that has been used in Canada. Evaluate the instrument in terms of its efficiency (or cost-effectiveness), equity, enforceability, and incentives created for polluters to innovate.

2. Suppose the demand for a product is P = 100 - ½ Q and the supply of virgin inputs is 20 units. The marginal cost curve for recycled inputs is r = Q/4. Compute the socially efficient output level, the use of recycled inputs, and the efficient recycling ratio. Recompute all these under the following changes (take them one at a time) and compare them to the original case.

Demand falls to 80 - ½ Q

The MC curve for recycling inputs becomes r = Q/6

The supply curve for virgin inputs increases to 30.

Reference no: EM13882799

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