# Question

Figure shows that for any given demand curve for the right to pollute, the government can achieve the same outcome either by setting
a price with a corrective tax or by setting a quantity with pollution permits. Suppose there is a sharp improvement in the technology for controlling pollution.
a. Using graphs similar to those in Figure, illustrate the effect of this development on the demand for pollution rights.
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b. What is the effect on the price and quantity of pollution under each regulatory system?Explain.

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