Subsidizing firms that pollute will reduce pollution in the long run.

Question

Quizplus · Accepted Answer

Subsidizing firms that pollute creates incentives for them to continue polluting rather than investing in cleaner technologies. In the long run, this will lead to more pollution as the subsidized firms continue to pollute without consequence. Instead, it is more effective to levy taxes or penalties on polluting firms to encourage them to reduce their pollution levels.

Subsidizing Firms That Pollute Will Reduce Pollution in the Long