Explain the intuition behind why market-based instruments (emissions taxes/tradeable permits) are cost-effective, whereas uniform standards are generally not. Provide a graph for a situation where market-based instruments would alleviate a particularly-large deadweight loss relative to the command-and-control “standards” policy. Then make an argument about why we generally need some mix of both policies in the context of (1) electricity consumption and (2) land conservation.

Explain the intuition behind why market-based instruments (emissions taxes/tradeable permits) are cost-effective, whereas uniform standards are generally not. Provide a graph for a situation where market-based instruments would alleviate a particularly-large deadweight loss relative to the command-and-control “standards” policy. Then make an argument about why we generally need some mix of both policies in the context of (1) electricity consumption and (2) land conservation.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 4SQ

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