Discussthe natuse oA reguladionan d corrective tall thatwas imposed to rectiay theactbd the A irms?09 Polluting envinment

Answered: Discuss the natuse oA reguladion an d…

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 30CTQ: Would environmentalists favor command-and-control policies as a way to reduce pollution? Why or why...

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Discuss
the natuse oA reguladion
an d corrective tall that
was imposed to rectiay the
act
bd the A irms?
09 Polluting envinment

Expert Solution

Step 1

Pollution is an example of negative externality which impose on others apart from the producer and consumers of that particular good which creates pollution. Due to externality, the social marginal cost (SMC) differs the private marginal cost (PMC) by external cost (EC) created by pollution.

The government use many types of regulation to regulate the production the pollution which include direct regulation and market-based policy.

The corrective tax is a market-based policy that provides incentives to firms to correct the pollution. So the nature of the corrective tax regulation is that it is market-based incentive regulation.

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