The efficient way to achieve any given set of pollution standards in a multifirm market is to have the firms with a lower cost of abatement reduce their emissions of pollutants by ______________ the firms with a higher cost of abatement.

Question

Quizplus · Accepted Answer

Having firms with lower cost of abatement reduce their emissions more than the firms with a higher cost of abatement will result in achieving the given pollution standards in the most cost-effective way. This is because the firms with a lower cost of abatement can achieve the same level of pollution reduction at a lower cost compared to the firms with a higher cost of abatement. Therefore, it makes economic sense to allocate a higher share of the pollution reduction responsibility to the firms with a lower cost of abatement.

The Efficient Way to Achieve Any Given Set of Pollution