Chapter Questions
Environmental protection programs are frequently designed to require all polluters to cut back emissions by a certain percentage. What are the perverse incentives built into this type of program?
If emission standards are ruled out because of, for example, the impossibility of measuring emissions (as in nonpoint-source emissions), what alternative types of standards might be used instead?
In Figure 11.2, show the social cost of setting a uniform national standard, applicable to both rural and urban areas (to do this, you can assume that the national standard is set at either $e_u$ or $e_r$ ).
Consider the example of Figure 11.3. Suppose we define as fair a cutback in which the two sources have the same total costs. Would an equiproportionate reduction be fair in this sense? A reduction meeting the equimarginal principle? Is this a reasonable definition of fair?
It is sometimes suggested that the most equitable way to resolve issues in international trade agreements would be for all countries to adopt the same emission standards. What are the pros and cons of this from an economic standpoint?