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a) Explain why taxing negative externalities are usually preferred over mandating technologies by economists. b) To tax a negative externality requires a regulatory body to
a) Explain why taxing negative externalities are usually preferred over mandating technologies by economists.
b) To tax a negative externality requires a regulatory body to be able to observe the externality. Suppose we know that a power station emits harmful SO2, but the regulator is unable to observe the quantity of SO2 emitted and therefore cannot tax these emissions. In the absence of a tax could a technology standard improve total social welfare?
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