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An emissions tax (imposed on each unit of pollution produced) that is set too high to achieve ...

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An emissions tax (imposed on each unit of pollution produced) that is set too high to achieve ...

An emissions tax (imposed on each unit of pollution produced) that is set too high to achieve allocative efficiency will cause

▸ too many resources to be devoted to pollution abatement and too little of the product to be produced.

▸ no change in the polluting firm's behaviour.

▸ new firms to enter the industry.

▸ too few resources to be devoted to pollution abatement and too much of the product to be produced.

▸ too few resources to be devoted to pollution abatement and too little of the product to be produced.

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Microeconomics

Edition: 17^th

Author: Ragan

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