The ________ level of pollution can be negotiated privately based on property rights when only a few parties are involved and the source, amount, and type of pollution is clearly identifiable.

Question

Quizplus · Accepted Answer

The socially efficient level of pollution is the level where marginal cost of reducing pollution is equal to the marginal benefit of pollution reduction. When only a few parties are involved and the source, amount, and type of pollution is clearly identifiable, property rights can be established and negotiation can take place to reach the socially efficient level of pollution. This approach is more effective and efficient than setting a zero-emissions standard or a fair standard which may be too stringent or too lenient for specific situations. Choosing the most cost-effective level of pollution reduction may not necessarily lead to the socially efficient level as it does not take into account the externalities of pollution.

The ________ Level of Pollution Can Be Negotiated Privately Based