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Consider a case where there are two firms and a regulator wants to half pollution from those firms. The regulator can use either a Pigouvian

Consider a case where there are two firms and a regulator wants to half pollution from those firms. The regulator can use either a Pigouvian tax to reduce pollution or pass a law requiring firms to half their pollution output. If the two firms are identical (same marginal benefit to polluting and same private marginal costs), does it matter what the regulator does? If the two firms have different marginal benefits of polluting, does it matter? Explain

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