Figure shows that for any given demand curve for the right to pollute, the government can achieve
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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.
![Figure shows that for any given demand curve for the](https://dsd5zvtm8ll6.cloudfront.net/si.question.images/image/images5/207-B-E-M-EC(957).png)
b. What is the effect on the price and quantity of pollution under each regulatory system?Explain.
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