If a firm goes out of business because an environmental regulation now requires them to incur pollution-control costs that they were previously getting for free (at society's expense),society will be better off to have the polluter exit the industry.

Question

Quizplus · Accepted Answer

If a firm is causing environmental harm and society is bearing the cost of that harm, then it is better for society if the polluter exits the industry rather than causing further damage to the environment. The environmental regulation requiring pollution-control costs is to protect the environment and the health of individuals, and thus, it is in the best interest of society to have the polluter exit the industry rather than continuing to harm the environment.

If a Firm Goes Out of Business Because an Environmental