The efficient amount of air pollution is in general independent of whether polluters or pollutees pay to reduce pollution.

Question

Quizplus · Accepted Answer

The efficient amount of air pollution depends on the allocation of property rights (whether polluters pay to reduce pollution or pollutees pay to tolerate it) due to the Coase Theorem, which suggests that the allocation of resources will be efficient as long as property rights are clearly defined and transaction costs are low, regardless of who holds these rights. However, the distribution of costs and the practical implementation of pollution reduction can be significantly affected by who is responsible for the payments.

The Efficient Amount of Air Pollution Is in General Independent