Private and competitive markets could produce efficient levels of pollution if

Question

Quizplus · Accepted Answer

Private and competitive markets could produce efficient levels of pollution if the appropriate tax per unit of pollution were administered and enforced. This is because the tax would create a cost for polluting, incentivizing firms to reduce their emissions to the socially optimal level. Without the tax or another form of regulation, firms have no incentive to reduce pollution, leading to overproduction of pollution and harmful environmental impacts. While other choices may also have some positive effects, option C is the most effective and widely recognized solution.

Private and Competitive Markets Could Produce Efficient Levels of Pollution