A Pigovian tax achieves an efficient allocation of pollution across firms because each firm chooses how much

Question:

A Pigovian tax achieves an efficient allocation of pollution across firms because each firm chooses how much to produce and pollute by taking the tax into account, and then produces the quantity at which marginal social cost equals price. Because all firms face the same market price, they also incur the same marginal social cost.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Foundations Of Microeconomics

ISBN: 9780134491981

8th Edition

Authors: Robin Bade, Michael Parkin

Question Posted: