Question

According to the dual-control approach, states set abatement levels for existing stationary sources below the EPA-administered standard for new sources. The "new source bias" associated with this approach is that:

a. firms have an incentive not to start new construction and instead remain in older, existing facilities

b. states have an economic motive to set very stringent standards for existing sources

c. the EPA has an incentive to set lenient standards for new sources

d. firms have an incentive to shut down their businesses

Answer 1

Ans: firms have an incentive not to start new construction and instead remain in older, existing facilities

Explanation:

The Existing sources are controlled by states, which have an incentive to set more lenient standards to avoid losing firms to other states. These lenient standards are cheaper than the source.

Thus, option [a] is correct answer.