Emission charges and cost-effectiveness Emission charge approaches realize the equi-marginal principle, since each firm tries to equalize its marginal abatement costs and the tax rate. That is, t* = MAC A = MAC B holds. This equation implies that these approaches are cost effective. MAC A MAC B a b c d t* The total abatement costs are (b + d ...

The Equimarginal Principle of Cost Effectiveness ; To minimize the total cost of abating pollution by a given level, allocate abatement among multiple sources such that marginal costs of abatement are equalized. Discuss an example to show the equimarginal principle: MC a =MC b =... across all plants (subscripts a and b denote different plants).

•Equimarginal principle (production) If you have multiple sources to produce a given product, and you want to minimize the total cost of producing a given quantity of that output, distribute the production is such a way as to equalize the marginal costs between the production sources.

Explain the equimarginal principle and how it applies to marginal abatement costs. Illustrate graphically the determination of a socially efficient level of pollution and how this equilibrium minimizes net social costs compared to no emission control. A positive statement is a study of facts, the actual events in the real world.

equi-marginal principle is not satisfied. This contrasts with prior work that analyzes inter-pollutant trade ratios when one-to-one intra-pollutant trading rates are assumed due to uniform mixing of like pollutants. We illustrate our analytical results using a numerical example of nitrogen trading in the Susquehanna River Basin in Pennsylvania.

standards: ambient, emission, and technology. • A leading problem with standard setting is the question of cost-effectiveness and the equimarginal principle. When marginal abatement costs differ among sources, as they almost always do, uniform standards cannot be cost-effective; individual standards are required.

Equimarginal Principle. Strongest case for a policy of effluent charges is the equimarginal principle. Same tax rate is applied to different sources with different marginal abatement cost functions. Each source reduces its emissions until its marginal abatement costs equal the tax.

The least cost theorem = Equi-marginal principle I A necessary condition to achieve abatement at least cost. I The marginal cost of abatement (MAC) is equalized over all

Criteria for choosing emission control instruments I The use of cost-e ective instruments is a prerequisite for achieving an economically e cient allocation of resources. I Least-cost theorem: a necessary condition for abatement at least cost is that the marginal cost of abatement is equalized over all polluting rms. (equimarginal principle)

The equimarginal principle The secret to why we aggregate MAC curves by adding them horizontally, rather than vertically, is the equimarginal principle: “To get the minimum aggregate MAC curve, the aggregate level of emissions must be distributed among the different sources in such a way that they all have the same marginal abatement costs ...