If the government has enough knowledge about a market and the damage it causes through pollution,it can force the socially optimal output

Question

Quizplus · Accepted Answer

An emission fee is a market-based approach that internalizes the cost of pollution. By charging producers a fee based on the amount of pollution they emit, the government can incentivize them to reduce their pollution output to socially optimal levels. This approach allows the market to find the most efficient way to reduce pollution while still allowing businesses to operate. Bans on pollution might be too extreme and could cause economic harm, while deregulation to eliminate monopoly power might not directly address pollution.

If the Government Has Enough Knowledge About a Market and the Damage