When environmental regulation of an entire industry results in output adjustments,the social cost of the regulation can be measured by the changes in consumer and producer surpluses.

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When environmental regulation results in output adjustments, the changes in consumer and producer surpluses can be used to measure the social cost of the regulation. Consumer surplus refers to the difference between the amount consumers are willing to pay for a good or service and the actual market price they pay. Producer surplus, on the other hand, refers to the difference between the price producers receive for a good or service and the minimum amount they are willing to accept to produce that good or service. When regulation causes output adjustments, these surpluses may change, and measuring the magnitude of these changes can provide insight into the social cost of the regulation.

When Environmental Regulation of an Entire Industry Results in Output