Suppose we have an agricultural valley (100 mathrm{~km}) by (50 mathrm{~km}), with a polluting electricity power plant.

Question:

Suppose we have an agricultural valley \(100 \mathrm{~km}\) by \(50 \mathrm{~km}\), with a polluting electricity power plant. The power plant causes pollution problems in a narrow strip of land downwind of the plant, and within this valley. \(10 \mathrm{~km}\) in length and \(500 \mathrm{~m}\) in width, but no problems outside of that area. The total effect of the pollution is to make crop land less productive. If we were to clean up the pollution, would we expect land prices to increase? Where? Would we expect wages to decline? Would the changes in land prices and/or wages fully reflect the benefits of cleaning up the pollution? Why or why not?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question
Question Posted: