The major difficulty with using a tax on pollution instead of a fixed percentage reduction regulation is

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The major difficulty with using a tax on pollution instead of a fixed percentage reduction regulation is establishing the optimal size of the tax. It is essential to determine the precise amount of tax to be imposed to make a significant environmental impact while still being economically feasible for companies to pay. If the tax is set too low, it may not motivate companies to reduce their emissions, while if the tax is set too high, it could have severe economic consequences, such as increased costs of goods and services, loss of jobs, etc. Therefore, determining the optimal tax rate is a challenging task.

The Major Difficulty with Using a Tax on Pollution Instead