Pollution abatement is likely to be most costly under:
A)a compliance standard.
B)a per-unit pollution tax system.
C)a system of transferable pollution rights.
D)Costs are the same under all three pollution control policies.

Question

Pollution abatement is likely to be most costly under:
A)​a compliance standard.
B)​a per-unit pollution tax system.
C)​a system of transferable pollution rights.
D)​Costs are the same under all three pollution control policies.

Quizplus · Accepted Answer

Under a compliance standard, firms are required to meet a specific pollution limit regardless of the cost. This can result in higher costs for the firm as they may need to invest in expensive pollution abatement technology. In comparison, a per-unit pollution tax system incentivizes firms to reduce pollution at the lowest cost possible. A system of transferable pollution rights provides flexibility and allows firms to trade pollution allowances. Therefore, pollution abatement is likely to be most costly under a compliance standard.

Pollution Abatement Is Likely to Be Most Costly Under