Jesse Fox

Research Assignment #2 1. See graph

2. If countries A and B had to meet the GHG emission reduction obligations under the Kyoto Protocol, the cost for country A is 22 billion dollars and the cost for country B is 10 billion dollars. If all countries were to achieve a reduction of 13 units, the cost would be 93.5 billion dollars.

3. Demand Curve: Country A Quantity 1 2 3 4 5 6 7 8 9 10 11 Price (billions) 20 18 16 14 12 10 8 6 4 2 0

4. Supply Curve: Country B

Quantity 1 2 3 4 5 6 7 8 9 10 11 0 0 6 8 10 12 14 16 18 20 22

Price (billions)

5. See graph

6. If all the countries decide to reduce emissions by the target of 1,300 million tons, the cost would total 93.5 billion dollars. If countries A and B decided to trade their GLPs, the total cost would be less than if they didnt trade. If one country trades with another, that country is able to produce the same amount of emissions without spending as much money to reduce it. 7. No, I dont think that Country C should participate in the trading between countries A and B. Due to the fact that theyre cost remains the same from 1 to 13 million tons of GHGs reduced, they would not play a significant role in the trading pricess.