The marginal abatement cost curve (MAC) shows, for every emissions level, a firm or industry’s marginal cost (foregone profits) of reducing emissions, or equivalently, its marginal willingness to pay for the right to emit one additional unit of pollution. The term ‘abatement’ here denotes a unit reduction in emissions, as distinct from units of specific abating inputs, such as smokestack scrubbers. The MAC is not invariant to the form of the emissions control policy. The aggregate MAC for an industry is only well defined in cases where the policy achieves cost efficiency by equalising MAC levels across all emitters.
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