Chapter 12: Problem 18
What is command-and-control environmental regulation?
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Chapter 12: Problem 18
What is command-and-control environmental regulation?
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What is a pollution charge and what incentive does it provide for a firm to take external costs into account?
In the Land of Purity, there is only one form of pollution, called "gunk." Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose. $$\begin{array}{l|l|l} \hline \text { Combos } & \text { Eco Output } & \text { Gunk Cleaned Up } \\ \hline \mathrm{J} & 800 & 10 \% \\ \hline \mathrm{K} & 500 & 30 \% \\ \hline \mathrm{L} & 600 & 40 \% \\ \hline \mathrm{M} & 400 & 40 \% \\ \hline \mathrm{N} & 100 & 90 \% \\ \hline \end{array}$$ a. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis. b. Which choices display productive efficiency? How can you tell? c. Which choices show allocative efficiency? How can you tell? d. In the choice between \(K\) and \(L\), can you say which one is better and why? e. In the choice between \(K\) and \(N,\) can you say which one is better, and why? f. If you had to guess, which choice would you think is more likely to represent a command-andcontrol environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?
A city currently emits 16 million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13 shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. a. Using the information in Table 12.13 calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. b. What is the optimal level of sewage for this city? How can you tell?
What are the economic tradeoffs between lowincome and high-income countries in international conferences on global environmental damage?
The rows in Table 12.7 show three market-oriented tools for reducing pollution. The columns of the table show three complaints about command-and- control regulation. Fill in the table by stating briefly how each market- oriented tool addresses each of the three concerns. $$\begin{array}{l|lcc}\hline & \begin{array}{l}\text { Incentives to } \\\\\text { Go Beyond }\end{array} & \begin{array}{c} \text { Flexibility about Where and How } \\\\\text { Pollution Will Be Reduced }\end{array} & \begin{array}{c}\text {Political Process Creates } \\\\\text { Loopholes and Exceptions }\end{array} \\\\\hline \begin{array}{l}\text { Pollution } \\\\\text { Charges }\end{array} & & \\\\\hline \begin{array}{l}\text { Marketable } \\\\\text { Permits }\end{array} & & \\\\\hline\begin{array}{l}\text { Property } \\\\\text { Rights }\end{array} & & \\\\\hline\end{array}$$
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