Deck 11: Command-And-Control Strategies: the Case of Standards

Question 1

Standards that take the form of never-exceed levels for specific pollutants in an ambient environment are known as ________.

A)emission standards
B)ambient standards
C)performance standards
D)technology-based standards

Answer 1

B

Question 2

If the marginal abatement cost equation for an industry is given by: MAC = 600 - 0.5E and the marginal damage cost equation for the same industry is MDC = 2.5E,what is the socially efficient equilibrium standard? What is the total abatement cost to achieve this standard?

Answer 2

The socially efficient equilibrium standard is set equal to E^* which corresponds to the level of emissions that equates MAC to MDC:
600 - 0.5E^* = 2.5E^*
E^* = 600/3 = 200
The socially efficient equilibrium emission standard is equal to 200 units of emissions.The total abatement cost to achieve this standard is equal to the area under the MAC equation from emissions of 200 to the level of unregulated emissions,E₀,which can be found by setting MAC = 0:
0 = 600 - 0.5E₀
E₀ = 600/0.5 = 1,200
So TAC = ½(1,200 - 200)500 = $250,000.

Question 3

Standards will be cost effective when they equate the level of emissions at each source.
This would only be true in the unlikely event that each source had identical marginal abatement cost functions.

Answer 3

False

Question 4

The ________ measures the residuals produced per unit of output (e.g. ,SO₂ emissions per kilowatt hour of electricity produced).

A)emission standard
B)emissions intensity
C)emission concentration
D)emission rate

Question 5

When marginal damages for a pollutant vary by region,time of day,or season,a(n)________ will not be socially efficient but ________ that set the MAC curve equal to each MDC curve are socially efficient.

A)uniform standard;individual standards
B)ambient standard;uniform standards
C)individual standard;uniform standards
D)technology-based standard;uniform standards

Question 6

In order to set individual standards in accordance with the equimarginal principle,regulators would have to know the marginal abatement cost relationship for each polluting source.
The informational requirements to set cost-effective standards are very high.

Question 7

When marginal damages for a pollutant vary by region,time of day,or season,a uniform standard will not be socially efficient but individual standards that equate the MAC to each MDC are socially efficient.

Question 8

Is there a uniform standard for carbon monoxide emissions that can be socially efficient in both urban and rural areas? Very briefly explain why or why not.

Question 9

Technology-based standards provide firms with no incentive to find cheaper ways to reduce their emissions.

Question 10

When regulators allow firms to self-monitor their compliance with emission standards,occasional audits from the regulator aim to avoid the problem of incomplete compliance.

Question 11

Regulators need to strike a balance when setting the size of penalties for non-compliance so that courts will not be reluctant to impose sanctions on firms who fail to meet the standard.

Question 12

Under ________ the burden is on the ________ to make the right decision about what technology to use.

A)technology-forcing standards;pollution control industry
B)technology-based standards;polluting firms
C)technology-based standards;public regulatory authority
D)emission standards;public regulatory authority

Question 13

List five perceived advantages of using standards to address environmental problems.

Question 14

Including the costs of enforcement decreases the socially efficient level of emissions.
Combining the marginal costs of enforcement with the MAC results in the socially efficient level of emissions increasing.

Question 15

The socially efficient equilibrium emission standard sets the maximum rate of emissions equal to the ________.

A)socially efficient level of abatement
B)socially efficient level of emissions
C)level of emissions that maximizes total abatement cost
D)level of emissions that minimizes total abatement cost

Question 16

________ set standards that are unrealistic with today's technology in the hope that they will motivate the pollution-control industry to invent ways of meeting the standard at reasonable cost.

A)Technology-based standards
B)Technology-forcing standards
C)Strict emission standards
D)Performance standards

Question 17

If the firm faced a standard of 40 units of emissions,what is the maximum amount of money it would be willing to spend on R&D to achieve the lower MAC?

A)$200
B)$400
C)$600
D)$800

Question 18

The ambient quality of the water at various points downstream of a source of pollution depends on the quantity of emissions only.
The ambient quality of the water depends on the quantity of emissions as well as the hydrology of the river (e.g. ,rate of flow,temperature,etc. ).

Question 19

Emission standards specify the technologies,techniques,or practices that potential polluters must adopt.

Question 20

The socially efficient equilibrium emission standard sets the maximum rate of emissions equal to the ________.

A)the level of abatement that equates MAC and MDC
B)level of emissions that maximizes total abatement cost
C)the level of emissions that minimizes total abatement cost
D)the level of emissions that equates MAC and MDC

Question 21

Suppose the regulator wished to reduce total industry emissions by 25% by implementing a uniform standard.What is the level of emissions and abatement at each source under the uniform standard? What is the total compliance cost for the industry of the uniform standard? Is this a cost-effective allocation of the industry abatement target?

Question 22

Technology-based standards have two different enforcement issues.Briefly explain what these two issues are.

Question 23

Suppose the regulator wished to reduce total industry emissions by 25% by implementing cost-effective,individual standards.What is the level of emissions and abatement at each source under cost-effective,individual standards? What is the total compliance cost for the industry under the individual standards?B.When source A emits 320 units,MAC_A = 1,200 - 3(320)= $240 and when source B emits 280 units,MAC_B = 800 - 2(280)= $240.The total abatement cost for each source will be the area under the MAC curve from the current level of emissions to emissions of 400 (the unregulated level of emissions).
TAC_A = ½(80 * 240)= $9,600
TAC_B = ½(120 * 240)= $14,400
The total compliance cost of the uniform standard for the industry is equal to the sum of the total abatement costs at each source:
TCC = 9,600 + 14,400 = $24,000
We know this is cost effective because MAC_A = MAC_B.

Question 24

What are the socially efficient individual standards for carbon monoxide? What is the total abatement cost in each area under this scheme?