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In a market, a certain crop is organically and locally grown, and is actually estimated to have positive externalities on all the same issues. The
In a market, a certain crop is organically and locally grown, and is actually estimated to have positive externalities on all the same issues. The positive externality is estimated to be E(Q) = 5Q. Would market clearing prices (assuming downward sloping demand and upward sloping demand) lead to an efficient outcome? If not, could a tax or subsidy achieve efficiency (and how big)?
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