a. If each country acts unilaterally to maximize its own welfare, what level of emissions
will it choose? What is the benefit to each country associated with its own unilateral
action relative to no abatement? How much do Europe and Japan benefit from the US
unilateral emissions policy?


b. If all three countries act to maximize their combined welfare, what levels of emissions
will be chosen? Relative to the case where all countries pursue unilateral policies,
what is the additional gain to each region from the policy coordination? Why does the
US gain more from coordination than the other two countries?



c. Suppose that Europe and Japan cooperate but that the US free-rides (i.e., pursues the
unilateral policy). Assuming no retaliation by the other countries, what is the gain to
the US from free riding relative to the gain from cooperating with the other countries?