Why do most economists favor emissions taxes and transferable ...

[2125004343]

Why do most economists favor emissions taxes and transferable pollution rights over compliance standards as pollution deterrents?

Question 2

An import quota or tariff on French wine that raises the prices for wine will probably
 a. hurt domestic wineries, which will lose business as a result of the higher prices.
 b. hurt both domestic wine drinkers and domestic wine producers because of a reduction in competition.
 c. hurt both domestic wine drinkers and domestic wineries but this will be more than offset by a reduction in driving fatalities.
  d. hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices.

[josephsuarez]

Answer to Question 1

Compliance standards do not consider which firms can reduce pollutants at the lowest cost. Pollution taxes, on the other hand, encourage firms to develop and utilize abatement technologies in order to avoid paying taxes. Firms able to reduce pollution levels at relatively low opportunity costs can sell transferable pollution rights to firms unable to reduce pollution levels except at relatively high opportunity costs.

Answer to Question 2

d