8) The graph below is of aggregate marginal damage and aggregate marginal abatement costs associated with some pollutant. Suppose a regulator wishes to control emissions with a competitive transferable emissions permit policy. p* Aggregate Marginal Abatement Costs d C Q*=E* b a EU Aggregate Marginal Damage Aggregate Emissions a. Identify the efficient supply of emissions permits. What will be the price of permits if sources trade them competitively? [1 point] b. Identify the reduction in aggregate damage from the efficient policy. [1 point] c. Identify the aggregate abatement cost of the efficient policy. [1 point] d. Identify the aggregate value of all emission permits. Under what circumstances does this value accrue to the pollution sources? Under what circumstances does this value accrue to the

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8 the graph below is of aggregate marginal damage and aggregate margin

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8) The graph below is of aggregate marginal damage and aggregate marginal abatement costs associated with some pollutant. Suppose a regulator wishes to control emissions with a competitive transferable emissions permit policy. p* Aggregate Marginal Abatement Costs d C Q*=E* b a EU Aggregate Marginal Damage Aggregate Em