00:01
Pollution in optimal coal.
00:03
Some might say yes because ultimately all pollution has a social cost and we should avoid all social costs.
00:10
So that's a pretty simple argument.
00:12
We should incur unnecessary costs that nobody is responsible for at the end of the day.
00:18
Or there's another argument that's based on a market graph.
00:23
So we'll draw our market graph, not a market graph, i'm sorry, are social cost graph.
00:28
And this uses the concept of diminishing marginal returns, and that's our marginal social benefit.
00:36
And so there's diminishing marginal returns because for every additional unit of air pollution reduced or water pollution we reduce, we get less and less benefit.
00:47
Taking the first tonne out of the lake is not as beneficial as taking the last tonne out of the lake because it affects the environment less.
00:56
And so there's less of a benefit.
01:01
Then we also have the marginal social cost...