Assume a city of (1,000,000) people, (60 %) of whom are willing to pay ($ 1) maximum
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Assume a city of \(1,000,000\) people, \(60 \%\) of whom are willing to pay \(\$ 1\) maximum (each) to clean up pollution. The rest of the population is wealthier and is willing to pay \(\$ 100\) each to clean up pollution. Pollution clean-up costs \(\$ 2,000,000\). It has been proposed that each person be taxed equally to pay for the pollution clean-up. Will that pass a majority-rule vote? Is it desirable from the point of view of the Pareto criterion? Is it a good idea, using the compensation principle? Which social choice mechanism do you think is best on intuitive grounds, and why?
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