Calculate the efficient Pigouvian tax to correct the externality in Worked-Out Problem 20.1. Show graphically and algebraically

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Calculate the efficient Pigouvian tax to correct the externality in Worked-Out Problem 20.1. Show graphically and algebraically that, with this tax, the competitive equilibrium will be efficient.

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Microeconomics

ISBN: 978-1118572276

5th edition

Authors: David Besanko, Ronald Braeutigam

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Question Posted: Mar 18, 2016 04:59 AM

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Calculate the optimal Pigouvian tax to correct the externality in Problem 1. Show graphically and algebraically that, with this tax, the competitive equilibrium will be efficient.
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Calculate the efficient Pigouvian tax to correct the externality in Worked-Out Problem 20.1. Show graphically and algebraically

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To internalize the cost by using a Pigouvian tax the tax mu...View the full answer

Microeconomics

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