Negotiation Exercise on Tradeable Pollution Allowances: General Background Information Harvard Case Solution & Analysis

Designed to teach students about the trade-offs faced by firms to explore alternative approaches to compliance with regulations on pollution control. Utility Installation U.S. electricity industry in 1993. In accordance with the provisions of the 1990 Clean Air Act, coal utilities must reduce emissions of SO2 (sulfur dioxide) significantly by 1995 and then reduce their emissions by an additional 50% by 2000. In this stylized talks to each utility has an option according to the rules of one of three ways: 1) by installing pollution control equipment ("scrubbers"), 2) replacement of high-sulfur coal and / or 3) to acquire implemented SO2 allowances from other firms, overcomply with legislation controlling emissions. Necessary not only to each utility to reduce its emissions by different amounts, but the costs faced by each firm to clean up and go to fuels are also different. In addition, assumptions relating to the state regulatory frameworks differ in different negotiating groups. Talks are held in groups of four utilities, and some scripts for three different teams. (See supplement). "Hide
by Willis Emmons Source: Exercises 2 pages. Publication Date: December 21, 1992. Prod. #: 793072-PDF-ENG

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