Assume that larger firms can reduce pollution emissions more cheaply than smaller firms.A fixed percent reduction in pollution emissions would therefore

Question

Quizplus · Accepted Answer

A fixed percent reduction in pollution emissions would penalize smaller firms more because they typically have higher marginal costs of reducing emissions compared to larger firms, which can achieve reductions more cheaply due to economies of scale and more resources.

Assume That Larger Firms Can Reduce Pollution Emissions More Cheaply