Market Setup
Externality
P = a − b·Q (Demand)
PMC = c₀ + c₁·Q (Private MC)
MED = d₀ + d₁·Q (Marginal Ext. Damage)
SMC = PMC + MED
Policy Instrument
Click a policy card above to activate it and adjust its parameters here.
💰
Pigouvian Tax
Per-unit tax on output equal to marginal external damage at Q*
Price
🎫
Cap & Trade
Set a quantity cap; permits trade to equalize marginal costs
Quantity
📋
Command & Control
Uniform emission/output standard — no flexibility
Standard
🤝
Coasian Bargaining
Assign property rights; parties negotiate to efficient outcome
Rights