Business, 19.05.2020 20:18 memorybuxton

Suppose Arrow is located in a remote rural area, with very low pollution levels (marginal damage = 6), while Solow is located in an urban area, with other pollution sources and many more people exposed (marginal damage = 12). What is the efficient pollution allocation in this case? Note: question puts us back in the world of economic efficiency (i. e., where we maximize net social benefit) as opposed to the world of cost- efficiency where we minimize costs associated with reaching an environmental target. So here net benefit is equal to Benefits from pollution minus Pollution Damages. Since locations are not interdependent, you can find the pollution levels which maximize net social benefits from A’s pollution and then separately find efficient pollution from S.

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Suppose Arrow is located in a remote rural area, with very low pollution levels (marginal damage = 6...

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