e= emissions 2. If you were a government policy maker, would you prefer a standard or...

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2. If you were a government policy maker, would you prefer a standard or an emission tax to reduce emissions and achieve the

e= emissions

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Answer 1

Answer #1

Generally, emission standards tend to set up the maximum limit of pollutions that a firm can create but tax does not define the limit and imposes only taxes based on the pollutions that are created by the firms.

From a society perspective, it is clear that tax imposition might not effective to control pollution. A firm would continue to produce as long as it is profitable to do so. But emission standard strictly limits the activities of firms. Hence, emission standards would be the right policy decision.

And as far as, the firm is concerned, it would definitely go for taxes since these taxes can be easily tackled with when demands are high enough in the market. High demand keeps the price high and profits margins are also high enough.

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