Assume there is uncertainty about the costs of disposing of the waste: there is a fifty-fifty chance

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Assume there is uncertainty about the costs of disposing of the waste: there is a fifty-fifty chance that they will be $10,000 or $30,000. Discuss how this uncertainty affects the cost- benefit calculation, if the government is risk neutral (i.e., that it requires no risk premium to compensate it for bearing risk) or very risk averse (i.e., that it requires a large risk premium to compensate it for bearing risk).

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Economics Of The Public Sector

ISBN: 9780393925227

4th Edition

Authors: Joseph E. Stiglitz, Jay K. Rosengard

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