Policy 4: Tradable Permits

Policy:

• Each firm must own a permit for each ton it emits.
• Each firm is initially granted permits equal to 30 tons less than its initial emissions.
• The permits can be bought or sold

Questions:

• How many permits would your firm want to BUY at each of the following prices?
  • $1, $3, $5, $7, $9, $11, $13, $15, $17, $19
    This is your firm's demand curve for permits.
• How many permits would your firm want to SELL at each of the prices above?
  • $1, $3, $5, $7, $9, $11, $13, $15, $17, $19
    This is your firm's supply curve for permits.

• Fill in the bidding form first and wait to fill in the reporting form until after the price is announced.

Reporting