SECOND-BEST WORLDS

4.8

Reflection: Same prices different outcome

In the previous model exercise, you have experienced your first market distortion by a dominant firm.

Could you observe any change in how your choice of CO2 taxes and renewable subsidies impacted the market results? Did the coal firm deter your policies?

We suggest you make a note of your observations.

Exercise: Steering firms – what a difference a monopoly makes
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Monopoly model: the mathematics I
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