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- W2022643508 abstract "The trading of permits has been a significant innovation in controlling pollution in the past two decades. Ando and Ramirez Harrington (2006) developed an informative classroom exercise demonstrating the effectiveness of a tradable permits market. We provide three additional pedagogical tools for the exercise that will further engage students. First we show how students with an intermediate microeconomics background can algebraically and graphically calculate the market clearing permit price. Second, for advanced students we show how the cost minimizing allocation of pollution control is achieved using a Lagrangian equation and explain the economic interpretation of the shadow price. Third, we show how to solve the Lagrangian first order conditions computationally using Excel’s matrix inverse tool for each firm’s emissions reductions and the shadow price." @default.
- W2022643508 created "2016-06-24" @default.
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- W2022643508 date "2012-01-01" @default.
- W2022643508 modified "2023-09-27" @default.
- W2022643508 title "The Tradable Pollution Permit Exercise: Three Additional Tools" @default.
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- W2022643508 doi "https://doi.org/10.2139/ssrn.2166285" @default.
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