The table below depicts the marginal cleanup costs for Springfield's two polluters, ACME Corp. and Bluth Industries. Currently, each firm is polluting 100 units (for an industry total of 200 units). However, regulators have decided that the total amount of pollution in Springfield needs to be cut in half. Cleanup Marginal Cleanup Cost Marginal Cleanup Cost Level (A or B) ACME Bluth 10 20 30 40 2222 15 10 20 12 30 16 45 22 50 65 30 60 90 45 70 120 65 Suppose, instead, that regulators adopt pollution taxes. What tax level would guarantee the same outcome? Answer: A tax of 45.01 would achieve the same amount of cleanup.
The table below depicts the marginal cleanup costs for Springfield's two polluters, ACME Corp. and Bluth Industries. Currently, each firm is polluting 100 units (for an industry total of 200 units). However, regulators have decided that the total amount of pollution in Springfield needs to be cut in half. Cleanup Marginal Cleanup Cost Marginal Cleanup Cost Level (A or B) ACME Bluth 10 20 30 40 2222 15 10 20 12 30 16 45 22 50 65 30 60 90 45 70 120 65 Suppose, instead, that regulators adopt pollution taxes. What tax level would guarantee the same outcome? Answer: A tax of 45.01 would achieve the same amount of cleanup.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 33CTQ: Is zero pollution possible under a marketable permits system? Why or why not?
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Transcribed Image Text:The table below depicts the marginal cleanup costs for Springfield's two polluters, ACME Corp.
and Bluth Industries. Currently, each firm is polluting 100 units (for an industry total of 200
units). However, regulators have decided that the total amount of pollution in Springfield needs
to be cut in half.
Cleanup
Marginal
Cleanup Cost
Marginal
Cleanup Cost
Level (A or B)
ACME
Bluth
10
20
30
40
2222
15
10
20
12
30
16
45
22
50
65
30
60
90
45
70
120
65
Suppose, instead, that regulators adopt pollution taxes. What tax level would guarantee
the same outcome?
Answer: A tax of 45.01 would achieve the same amount of cleanup.
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