A completely successful emission charge would

Question

Quizplus · Accepted Answer

A completely successful emission charge would internalize the external costs of pollution into the private cost of production. This would make the private MC curve reflect the social MC curve, resulting in the efficient level of pollution output. Shifting the private MC curve until it intersects with price at zero output (A) would eliminate pollution completely, but it may not be socially optimal if the benefits of pollution outweigh the costs. Shifting the social MC curve to the same position as the private MC curve (C) is not feasible because the social MC curve represents the true cost of pollution to society and cannot be manipulated by policy measures.

A Completely Successful Emission Charge Would