Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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can you show the answers through a graph with two heterogeneous firms.
Transcribed Image Text:4. A classic way of introducing pollution regulation into an urban area is the "rollback"
method. First you determine the maximum tolerable level of a particular pollutant, x
Next you find the maximum current concentration of that pollutant in the urban
area, x. Presumably x > x, (otherwise, there is no problem). Regulations then
require all polluters in the city to reduce emissions from their current level of e
to e = e (x /x_). Explain how this would work to bring pollution levels down to an
acceptable point. What might be the efficiency problems with such an approach?
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