Ecological Economics Lecture 9 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Doctoral Program and Advanced Degree in Sustainable Energy Systems Doctoral Program in Mechanical Engineering Doctoral Program in Environmental Engineering

Pollution Economics – Problem 1 Producer surplus is zero MPC MEB MPB MSB=MPB+MEB

Producer Surplus – Problem 4 The Pigou tax is equal to MEC at the social optimum The surplus loss (-150) is compensated for by the amount of Pigou tax paid (100) and the reduction in external cost (100) Estamos a taxar a externalidade e a obter um valor para compensar os efeitos da externalidade (Patrícia and João)

Partial Equilibrium vs. General Equilibrium Computable General Equilibrium Model

Next Lecture ASSIGNMENTS Varian, Chapter 30, Review Questions 1-5 Pollution Economics, 7 and 9 Ethics, 1-4 READINGS Varian –Chapter 30, Welfare Perman et al. –Chapter 2, Part 1, Ethical Foundations for Environmental Economics Pearce and Kerry Turner –Chapter 6, Taxation and Optimal Pollution –Chapter 7, Environmental Standards, Taxes and Subsidies –Chapter 8, Marketable Pollution Permits