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Figure 1: Market for good with negative production externality, with two pos-sible demand curves,DandDPSMCMCD'Dq(a) The curve labeledDimplies a higher Pigouvian tax(b) The curve labeledDimplies a
Figure 1: Market for good with negative production externality, with two pos-sible demand curves,DandDPSMCMCD'Dq(a) The curve labeledDimplies a higher Pigouvian tax(b) The curve labeledDimplies a higher Pigouvian tax(c) The two curves imply the same Pigouvian tax
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