In the absence of government intervention, the marginal social cost of pollution abatement would equal its marginal social benefit.

Question

Quizplus · Accepted Answer

In the absence of government intervention, there is likely to be a market failure with regard to pollution because polluters do not pay the full social cost of their actions. As a result, the marginal social cost of pollution abatement is likely to be greater than its marginal social benefit, leading to over-pollution. Government intervention, such as imposing taxes or setting emissions standards, can help align the private costs of pollution with its social costs and promote efficient abatement.

In the Absence of Government Intervention, the Marginal Social Cost