When the social marginal benefit curve of reduction of pollution is locally flat and the costs of reduction are uncertain,which of the following generally makes sense?

Question

Quizplus · Accepted Answer

If the social marginal benefit curve is locally flat and the costs of reduction are uncertain, it implies that small changes in the amount of pollution reduction do not have a significant impact on social welfare. In such a case, implementing a price (tax) intervention by the government could be the best option as it would provide a clear incentive for firms to reduce pollution levels while allowing them the flexibility to choose the most cost-effective methods. On the other hand, quantity intervention or direct government provision of the product may not be the best alternatives as they do not offer as much cost-effectiveness or flexibility. No action is also not recommended as it would lead to negative externalities and harm the environment and public health.

When the Social Marginal Benefit Curve of Reduction of Pollution