- 1. Consider the case of greenhouse gas (GHG) sequestration (removal from the atmosphere) as a public good. Suppose the

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1 Consider The Case Of Greenhouse Gas Ghg Sequestration Removal From The Atmosphere As A Public Good Suppose The 1 (369.79 KiB) Viewed 39 times

- 1. Consider the case of greenhouse gas (GHG) sequestration (removal from the atmosphere) as a public good. Suppose there are 100 identical countries, each of which has an iden- tical inverse demand function for carbon removal given by p 20-D, where QD be the number of tons of GHGs removed from the atmosphere, and p is the marginal willingness to pay for removing carbon. Assume the marginal cost of sequestering GHGs is constant and $50 per ton. (a) Find the aggregate willingness to pay function for global greenhouse gas sequestra- tion. Graph this function, label all axis and intercepts. (b) How many tons of GHGs should be sequestered in order to maximize total global surplus (achieve allocative efficiency)? (c) Find the economic surplus (i.e. total surplus). What is the total net benefit to all countries of sequestering the amount found in part (b)?