Refer to the figures below to answer this question:
Cap-and-trade versus emissions fee when marginal social benefits are inelastic and costs are uncertai Cap-and-trade versus emissions fee when marginal social benefits are elastic and costs are uncertain:
a)In case of an inelastic marginal social benefit curve, what type of pollution reduction system shoul the government employ? Why?
b)If the social benefit curve is elastic, does your answer change?
c)What are the advantages and disadvantages of cap-and-trade systems over emission fee systems when the inflation and change in marginal costs are considered?

Question

Refer to the figures below to answer this question:
  Cap-and-trade versus emissions fee when marginal social benefits are inelastic and costs are uncertai  Cap-and-trade versus emissions fee when marginal social benefits are elastic and costs are uncertain:
a)In case of an inelastic marginal social benefit curve, what type of pollution reduction system shoul the government employ? Why?
b)If the social benefit curve is elastic, does your answer change?
c)What are the advantages and disadvantages of cap-and-trade systems over emission fee systems when the inflation and change in marginal costs are considered?

Quizplus · Accepted Answer

The Answer of Refer to the figures below to answer this question:
  Cap-and-trade versus emissions fee when marginal social benefits are inelastic and costs are uncertai  Cap-and-trade versus emissions fee when marginal social benefits are elastic and costs are uncertain:
a)In case of an inelastic marginal social benefit curve, what type of pollution reduction system shoul the government employ? Why?
b)If the social benefit curve is elastic, does your answer change?
c)What are the advantages and disadvantages of cap-and-trade systems over emission fee systems when the inflation and change in marginal costs are considered?

Refer to the Figures Below to Answer This Question