Berck Petrochemical
You’re producing petrochemical products at Berck Petrochemical. You’ve already decided how much you
produce, but now you realized that your outputs induce 8 units of GHG (green house gas) emissions.
Suddenly, the president of the United States showed up and said:
“I’ll give you 4 units of permits for your emissions. You need to abate the rest.” “Yes, you can!”
Here is your total abatement cost:
How much abate
0
1
2
3
4
5
6
7
8
Total Abatement
Cost ($)
0
100
600
1200
1900
2700
3600
4600
5700
Task 1: If the government does not allow trading the permits, what is your total abatement cost?
Total abatement cost =
Task 2: Now, the government allows trading the permits. You can sell/buy any numbers of permits. Negotiate
with your partner. Remember, your goal is to minimize your cost. You don’t care about the partner or the
society. For example, the negotiation can start like this:
“Do you want to buy 1 permit?” “How much can you pay?”
“Do you want to sell 3 permits with $..........?”
Number of Permits
Bought or Sold
Payment (+) or
Revenue (-)
How much do you need to
abate by yourself?
Your total Cost including
Payment (+) or Revenue (-)
Task 3: Finally, talk to your partner and figure out the total cost for the society with and without trading.
Your total cost + Partner’s total cost
(without trading)
Your total cost + Partner’s total cost
(with trading)
Difference
When you’re done, raise your hand. If it looks you’re done, I’ll give you chocolate!
Extra chocolate is rewarded if you minimize your cost best among classmates who play the same company.
Clean Tech Du
You’re producing petrochemical products at Clean Tech Du. You’ve already decided how much you produce,
but now you realized that your outputs induce 8 units of GHG (green house gas) emissions.
Suddenly, the president of the United States showed up and said:
“I’ll give you 4 units of permits for your emissions. You need to abate the rest.” “Yes, you can!”
Here is your total abatement cost:
How much abate
0
1
2
3
4
5
6
7
8
Total Abatement
Cost ($)
0
5
15
30
50
100
300
700
2000
Task 1: If the government does not allow trading the permits, what is your total abatement cost?
Total abatement cost =
Task 2: Now, the government allows trading the permits. You can sell/buy any numbers of permits. Negotiate
with your partner. Remember, your goal is to minimize your cost. You don’t care about the partner or the
society. For example, the negotiation can start like this:
“Do you want to buy 1 permit?” “How much can you pay?”
“Do you want to sell 3 permits with $..........?”
Number of Permits
Bought or Sold
Payment (+) or
Revenue (-)
How much do you need to
abate by yourself?
Your total Cost including
Payment (+) or Revenue (-)
Task 3: Finally, talk to your partner and figure out the total cost for the society with and without trading.
Your total cost + Partner’s total cost
(without trading)
Your total cost + Partner’s total cost
(with trading)
Difference
When you’re done, raise your hand. If it looks you’re done, I’ll give you chocolate!
Extra chocolate is rewarded if you minimize your cost best among classmates who play the same company.
Permit to emit 1 unit of GHG
Permit to emit 1 unit of GHG
Permit to emit 1 unit of GHG
Permit to emit 1 unit of GHG