Question: In our example of the negative externalities from pollution, we concluded that the loss of social surplus from the externality (deadweight loss) was significantly less
In our example of the negative externalities from pollution, we concluded that the loss of social surplus from the externality (deadweight loss) was significantly less than the dollar value of the damages caused by pollution. Briefly explain the economics behind this conclusion. On a related note, why does this lead economist say that optimal amount of pollution might not be zero?
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