Since it's not possible for governments to know the costs of pollution abatement as well as the polluters know themselves, then there is a(n)
A)asymmetric information problem.
B)externality problem.
C)moral hazard problem.
D)problem with the law of demand.

Question

Quizplus · Accepted Answer

Asymmetric information problem arises when one party has more or better information than the other, which is the case here where polluters have more information about the costs of pollution abatement than governments.

Since It's Not Possible for Governments to Know the Costs