13 Jun WHAT WOULD THE STOCK LEVEL BE AFTER ONE YEAR UNDER THIS STRATEGY?
Problems/Analyses
1. Suppose two countries with domestic cap-and-trade markets are considering linking their two systems. Country A has a cap of 60 tons of emissions, a domestic marginal cost of abatement of 2QA, where QA = tons of abatement by country A, and an uncontrolled emissions level of 90 tons. Country B has a cap of 50 tons, a domestic marginal cost of abatement of QB, where QB = tons of abatement by country B, and an uncontrolled emissions level of 80 tons.
a. [5 points] Before linkage what would be the permit prices in the two separate markets and how much would each country abate?
2
Now suppose these two markets were linked by allowing each country to buy from and sell allowances to the other:
b. [5 points] Which country would have an incentive to sell permits, and which country would have an incentive to buy permits? Explain why.
3
c. [5 points] What would be the resulting permit prices in the two markets and how much would each country end up abating?
4
d. [5 points] Compare the total control costs (the sum of both countries’ abatement costs) with and without linkage. Which system is more cost-effective? Why?
5
2. The figure below depicts the relationship between fish stock and annual growth in a particular fishery.
50
40
30
20
10
0
-10
0 1
0 100 110
0 20 3
04
05
06
07
08
09
Stock (1000s tons)
a. [10 points] In the figure above, label the points which represent: (i) the unstable equilibrium;
(ii) the stable natural equilibrium; and
(iii) the maximum sustainable yield.
6
Annual Growth (1000s tons)
b. [5 points] Suppose the current stock is 50,000 tons and a management strategy is introduced that allows an annual harvest of 40,000 tons:
(i) What would the stock level be after one year under this strategy?
(ii) What would the long-run stock level be? Explain.
7
c. [5 points] Use a well-labeled graph with a total cost curve and a total revenue curve for a fishery to show the difference between:
(i) the economically optimal harvest;
(ii) the maximum sustained yield; and
(iii) the open-access equilibrium.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.