Individual Abatement

This lecture focuses on the concept of individual abatement, analyzing the optimal level of emissions reduction for a single polluter based on marginal costs and gains. The instructor explains how efficiency is achieved when all emitters have equal marginal abatement costs, leading to a discussion on fairness and efficiency in emission reduction strategies. The lecture further explores the idea of transferring abatement efforts between high and low-cost emitters to minimize total abatement costs. Finally, the European Emission Trading System is presented as a real-world example of how market mechanisms can help achieve cost-effective emission reductions by equalizing marginal abatement costs among emitters.