An advantage of tradable permits over emission taxes is that no knowledge of marginal abatement costs is needed to ensure that the tax rate is optimal. the regulator sets the price of permits. the regulator does not have to determine how much to reduce pollution levels. the regulator must set the optimal tax rate

An advantage of tradable permits over emission taxes is that no knowledge of marginal abatement costs is needed to ensure that the tax rate is optimal. the regulator sets the price of permits. the regulator does not have to determine how much to reduce pollution levels. the regulator must set the optimal tax rate

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section10.2: Public Policies Toward Externalities

Problem 2QQ

See similar textbooks

Similar questions

The main disadvantage of an emissions tax is that .... differences among firms are not incorporated into the policy firms lack the flexibility to pursue different technologies firms cannot behave in an economically-efficient manner. firms do not have the incentive to reduce pollution. the total pollution reduction from an emissions tax cannot be known for sure.
What should the government set their corrective tax to if they want to eliminate 7 units of pollution?
A. Economic profit is an indication that consumers are willing to pay more for a good or service being offered. True False B. An advantage of tradable permits over emission taxes is that no knowledge of marginal abatement costs is needed to ensure that the tax rate is optimal. the regulator sets the price of permits. the regulator does not have to determine how much to reduce pollution levels. the regulator must set the optimal tax rate.
The government auctions off 500 units of pollution rights. They sell for 50 dollars per unit, raising total revenue of 25,000 dollars. The policy is equivalent to a corrective tax of _____ per unit of pollution 1. 10 dollars 2. 50 dollars 3. 450 dollars 4. 500 dollars
Describe the key symmetry between a pollution emissions tax and an emissions trading scheme. Outline some reasons you might wish to choose one approach in favour of the other when dealing with an emissions-reduction problem.
An emissions tax equal to _____ induces polluters to internalize the externality and leads to the socially optimal quantity of pollution. OA) the marginal social benefit at zero pollution B) the marginal social cost of pollution at the market-determined level of pollution C) the marginal social cost of pollution at the socially optimal quantity of pollution D) the marginal social benefit of pollution at the market-determined level of pollution
c) External costs in T-shirt production According to the World Wildlife Fund (WWF), it takes 2700 litres of water to produce one T-shirt. Water is used not only to grow cotton but also to dye clothing. Cotton growers use pesticides and chemicals that pollute the water. The pesticides and chemicals that remain in the environment harm animals and plant life. The WWF has been working with governments to help reduce this pollution. It advises them to introduce more regulation and to fine companies that pollute. Clothing manufacturers argue that this will add to their costs and mean they will supply less. This may mean they employ fewer people and will help reduce water pollution as less clothing is being manufactured. Fines will punish those that pollute while also earning the government revenue it can use to clean up the pollution. The fines must also be large enough to persuade firms to stop polluting. With reference to the information given in *External costs in T-shirt production' and…
1. regulations to limit air pollution (a) identify the market failure
The figure below shows a single firm's marginal abatement cost when facing a per-unit emissions tax of t. Use the figure to answer the following questions: a. What area(s) represent the total abatement cost (TAC) of the firm under the tax b. What area(s) represent the total amount in taxes paid by the firm $ t a b ان 6 e1 e2 emissions
The following companies all manufacture widgets and dump tons of glop into the air. Current contribution to overall pollution Manufacturer Polluters-r-us Smog brothers inc Costs to clean up 1 ton of glop $70 $100 $30 200 200 200 Really dirty industries The government wants to halve total pollution but does not know how much it will cost each company. Determine the total cost of the cleanup if the government employs a tradable permit scheme in which it gives the same amount of permits to each manufacturer at no cost.
List two advantages a command-and-control policy has over a pollution tax policy. (ii) List two advantages a pollution tax policy has over a command-and-control policy.
A polluting firm has Marginal Abatement Costs as graphed below and is faced with an emissions tax = T*. Assuming the firm will behave in a way to minimize it's costs, what are the total costs the firm would incur given this tax policy? $ MAC T* A B E* Emissions C D Eo