An effluent fee is more effective when imposed on
A) the firm or producer of the product which generates pollution.
B) the consumer of the product.
C) neither the producer nor the consumer of the product.
D) the supplier of the raw material used by the firm.

Question

Quizplus · Accepted Answer

An effluent fee is a form of pollution tax that aims to control the amount of pollution that firms release into the environment. Therefore, it is more effective when imposed on the firm or producer of the product which generates pollution as it provides an incentive for the firm to reduce their pollution output. Imposing the fee on the consumer or the supplier of raw materials may not be as effective in reducing pollution levels.

An Effluent Fee Is More Effective When Imposed on