What if the government only knows the marginal social damage of pollution at the equilibrium output level
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What if the government only knows the marginal social damage of pollution at the equilibrium output level x M and sets the tax rate equal to this quantity? Will this result in the optimal quantity being produced? If not, how do the SMC and the supply curve have to be related to one another in order for this method of setting the tax to work?
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Related Book For
Microeconomics An Intuitive Approach With Calculus
ISBN: 9781337335652,9781337027632
2nd Edition
Authors: Thomas Nechyba
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