Investigate what kind of policy would be needed to reduce damages inflicted on future generations based on the economic experiment with externalities shown in Figure 2.1.4 of the Learning point.

Figure  2.1.4

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1 6 11 16 21 co (5) 8 9 (10 BEQUU 12 17 ~8@@@@ 22 13 COMP 23 (14) (15) 18 19 20 24 25 Pollution level (1) Current generation profits (2) Amount removed (3) Amount of remaining contamination (1)-(3) Damage cost to future generations (4) 15 tons 1.5 billion 5 tons 10 tons 10 billion Experimental procedure 1. Construct a 5x5 box chart. 2. Current generation: Draw circles in consecutive squares for 5 seconds. The number of circles drawn represents the level of contamination (1 circle is worth 100 million in profits) 3. Future generation: Pollution removal. Shade in the circled boxes for 5 seconds. 4. Only the remaining circled boxes yield damages. One circle amounts to 1 billion in damage. 5. Calculate the total profits by subtracting the future generation's damages from the current generation's profits. FIGURE 2.1.4 An economic experiment with externalities