Due to the concept that economist call asymmetric information, polluting firms can mislead regulators regarding the costs of abatement.It is often in the interest of polluting firms to _________ the costs abatement so that the regulated target for emissions is _______ than the socially efficient level.

Question

Quizplus · Accepted Answer

Polluting firms may overstate the costs of abatement to make it seem more expensive to reduce emissions. This can lead regulators to set a higher emissions target than what is socially efficient, allowing firms to pollute more.

Due to the Concept That Economist Call Asymmetric Information, Polluting