Question

Many observers believe that the levels of pollution in our economy are too high

(a) If society wishes to reduce overall pollution by a certain amount, why is it efficient to have different amounts of reduction at different firms?

(b) Command and control approaches often rely on uniform reductions among firms. Why are these approaches generally unable to target the firms that should undertake bigger reductions?

(c) Economists argue that appropriate corrective taxes or tradeable pollution rights will results in efficient pollution reduction. How do these approaches target the firms that should undertake bigger reductions?

Answer 1