In a situation where there is no incentive to cut pollution
Because it will make domestic firms less competitive, it will
Improve world welfare if:
A)nations impose tariffs on polluters.
B)there is an international agreement so that every nation regulates global pollutants and no firms have competitive
Advantages because of lax pollution laws.
C)there is a ban on production until we can scientifically solve our pollution problems.
D)we allow the market to work in this case.

Question

Quizplus · Accepted Answer

Without an international agreement, individual nations may be hesitant to impose tariffs or bans on polluting firms within their borders, as it could harm their domestic economy. However, if all nations come to an agreement to regulate global pollutants, there will be no competitive advantages for firms with lax pollution laws, resulting in improved world welfare. Option A could also work, but it may create trade barriers and damage international relations. Option C is not feasible as it would halt all production until a solution is found, which is unrealistic. Option D may not work as the market may not naturally lead to cutting pollution without some form of regulation or incentive.

In a Situation Where There Is No Incentive to Cut