Ec383 - Problem set 2
Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit
Ec383 - Problem set 2
1. Modified version of Box 5.2 in Perman et al:
Consider a static model of flow pollution. Let the pollution damage D as a function of the level of emissions M be
D(M) = :
Let the pollution benefits B as a function of the level of emissions M be
(一 30M 一 M2 for 0 < M < 15
B (M) =〈
( 225 for M > 15
a. Draw the benefit function and the damage function on a diagram.
b. Draw the net benefit function NB(M) on a second diagram.
c. Draw the marginal benefit and marginal damage function on a third diagram.
d. Calculate the e¢ cient level of emissions M* .
e. Calculate the value of the total beneÖts, damages, and net benefits at the e¢ cient level of emissions M* :
2. Modified version of Box 5.3 in Perman et al:
Repeat the analysis in problem 1 but this time consider the case where the damage is a function of the stock of pollutant:
D(A) = :
and the relationship between stock and áow pollutant is
A = 2M:
a. Draw the benefit function and the damage function as functions of the emission áow on a diagram.
b. Draw the net benefit function NB(M) on a second diagram.
c. Draw the marginal benefit and marginal damage function as functions
of the emission áow on a third diagram.
d. Calculate the e¢ cient level of emissions M* and the associated level of pollution stock A* .
e. Calculate the value of the total beneÖts, damages, and net beneÖts at the e¢ cient level of emissions M* :
2023-01-20