Environmental Economics 7th Edition by Barry Field,Martha k Field

Exercise 4

Following are the marginal abatement costs of three firms, related to the quantity of emissions. Each firm is now emitting 10 tons/week, so total emissions are 30 tons/week. Suppose we wish to reduce total emissions by 50 percent, to 15 tons per week. Compare the total costs of doing this: ( a ) with an equiproportionate decrease in emissions and ( b ) with a decrease that meets the equimarginal principle.