Compared to an across-the-board reduction,taxing pollution emissions has the advantage of
A) eliminating the need for enforcement.
B) raising tax revenue.
C) concentrating the reduction in pollution among the firms that can do so at lowest cost.
D) eliminating the need for government research into pollution-reduction technology.
E) reducing emission to nearly zero.

Question

Quizplus · Accepted Answer

Taxing pollution emissions promotes reducing pollution among firms that can do so at a lower cost. This is because firms that can reduce pollution at a lower cost will do so to avoid the taxation, while firms that cannot do so at a lower cost will reduce pollution to a lesser extent. This ensures that the reduction in pollution is concentrated among the firms that can do so at a lower cost, leading to a more efficient reduction in pollution. Additionally, taxing pollution emissions can also raise tax revenue, which can be used for environmental protection and other public goods.

Compared to an Across-The-Board Reduction,taxing Pollution Emissions Has the Advantage