CAC versus Direct versus Indirect Taxes One of the main sources of water pollution is agricultural runoff.

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CAC versus Direct versus Indirect Taxes One of the main sources of water pollution is agricultural runoff. Consider three options to control this problem: (1) a command-and-control requirement prohibiting irrigation ditches from draining directly into streams or rivers; (2) a direct tax on chemical emissions from farms into streams or rivers; (3) an indirect tax placed on pesticide purchases. Evaluate these three options in terms of feasibility, enforceability, and—assuming they could be implemented—cost effectiveness and actual pollution reduction.

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