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To see how marketable permits can work to reduce pollution, consider the four firms listed in [link] . The table shows current emissions of lead from each firm. At the start of the marketable permit program, each firm receives permits to allow this level of pollution. However, these permits are shrinkable, and next year the permits allow the firms to emit only half as much pollution. Let’s say that in a year, Firm Gamma finds it easy and cheap to reduce emissions from 600 tons of lead to 200 tons, which means that it has permits that it is not using that allow emitting 100 tons of lead. Firm Beta reduces its lead pollution from 400 tons to 200 tons, so it does not need to buy any permits, and it does not have any extra permits to sell. However, although Firm Alpha can easily reduce pollution from 200 tons to 150 tons, it finds that it is cheaper to purchase permits from Gamma rather than to reduce its own emissions to 100. Meanwhile, Firm Delta did not even exist in the first period, so the only way it can start production is to purchase permits to emit 50 tons of lead.

The total quantity of pollution will decline. But the buying and selling of the marketable permits will determine exactly which firms reduce pollution and by how much. With a system of marketable permits, the firms that find it least expensive to do so will reduce pollution the most.

How marketable permits work
Firm Alpha Firm Beta Firm Gamma Firm Delta
Current emissions—permits distributed free for this amount 200 tons 400 tons 600 tons 0 tons
How much pollution will these permits allow in one year? 100 tons 200 tons 300 tons 0 tons
Actual emissions one year in the future 150 tons 200 tons 200 tons 50 tons
Buyer or seller of marketable permit? Buys permits for 50 tons Doesn’t buy or sell permits Sells permits for 100 tons Buys permits for 50 tons

Another application of marketable permits occurred when the Clean Air Act was amended in 1990. The revised law sought to reduce sulfur dioxide emissions from electric power plants to half of the 1980 levels out of concern that sulfur dioxide was causing acid rain, which harms forests as well as buildings. In this case, the marketable permits the federal government issued were free of charge (no pun intended) to electricity-generating plants across the country, especially those that were burning coal (which produces sulfur dioxide). These permits were of the “shrinkable” type; that is, the amount of pollution allowed by a given permit declined with time.

Better-defined property rights

A clarified and strengthened idea of property rights can also strike a balance between economic activity and pollution. Ronald Coase (1910–2013), who won the 1991 Nobel Prize in economics, offered a vivid illustration of an externality: a railroad track running beside a farmer’s field where the railroad locomotive sometimes gives off sparks and sets the field ablaze. Coase asked whose responsibility it was to address this spillover. Should the farmer be required to build a tall fence alongside the field to block the sparks? Or should the railroad be required to put some gadget on the locomotive’s smokestack to reduce the number of sparks?

Questions & Answers

show that the set of all natural number form semi group under the composition of addition
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_3_2_1
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The denominator of a certain fraction is 9 more than the numerator. If 6 is added to both terms of the fraction, the value of the fraction becomes 2/3. Find the original fraction. 2. The sum of the least and greatest of 3 consecutive integers is 60. What are the valu
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1. x + 6 2 -------------- = _ x + 9 + 6 3 x + 6 3 ----------- x -- (cross multiply) x + 15 2 3(x + 6) = 2(x + 15) 3x + 18 = 2x + 30 (-2x from both) x + 18 = 30 (-18 from both) x = 12 Test: 12 + 6 18 2 -------------- = --- = --- 12 + 9 + 6 27 3
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Q2 x+(x+2)+(x+4)=60 3x+6=60 3x+6-6=60-6 3x=54 3x/3=54/3 x=18 :. The numbers are 18,20 and 22
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Mark and Don are planning to sell each of their marble collections at a garage sale. If Don has 1 more than 3 times the number of marbles Mark has, how many does each boy have to sell if the total number of marbles is 113?
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Mark = x,. Don = 3x + 1 x + 3x + 1 = 113 4x = 112, x = 28 Mark = 28, Don = 85, 28 + 85 = 113
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x-2y+3z=-3 2x-y+z=7 -x+3y-z=6
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Solve for the first variable in one of the equations, then substitute the result into the other equation. Point For: (6111,4111,−411)(6111,4111,-411) Equation Form: x=6111,y=4111,z=−411x=6111,y=4111,z=-411
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Need help solving this problem (2/7)^-2
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x+2y-z=7
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A soccer field is a rectangle 130 meters wide and 110 meters long. The coach asks players to run from one corner to the other corner diagonally across. What is that distance, to the nearest tenths place.
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Jeannette has $5 and $10 bills in her wallet. The number of fives is three more than six times the number of tens. Let t represent the number of tens. Write an expression for the number of fives.
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. After 3 months on a diet, Lisa had lost 12% of her original weight. She lost 21 pounds. What was Lisa's original weight?
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Source:  OpenStax, Principles of microeconomics for ap® courses. OpenStax CNX. Aug 24, 2015 Download for free at http://legacy.cnx.org/content/col11858/1.4
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