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Assume country A with plenty of raw material for cement products, produces and exports the cement products to its neighbouring country, Country B. knowing that

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Assume country A with plenty of raw material for cement products, produces and exports the cement products to its neighbouring country, Country B. knowing that production of cement also produces a substantial amount of air pollution that not only pollutes country's A environment, but also causes a noticeable deterioration in country's B air quality while it could be prevented by using the available technology that can lower the pollution but with some higher production costs. The two countries do not have any policy to reduce the pollution now but after a bilateral agreement they have decided to address this issue. Which of the following would be the best solution to address the problem? a Country B's government should consider restricting its imports of cement from O country A. This does not create any incentive to adopt the lower-pollution technology. But it can lower country A's production, so pollution will be lower. O Country A's government should consider restricting its exports of cement to country B. This does not create any incentive to adopt the lower-pollution technology. But it may lower country A's production (if the producers do not find a new market for their product), so pollution will be lower. O The governments of both countries should determine the external costs imposed by the pollution on both countries combined and impose this as a tax per unit of pollution emitted by the cement producers. When the tax is imposed, the cement producers will adopt the lower-pollution technology. Country A's government should consider taxing cement's production. This does not O create any incentive to adopt the lower-pollution technology. But it may lower country A's production, so pollution will be lower

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