Suppose there is an advancement in the technology used to remove harmful gasses from the emissions of industrial factories, making pollution reduction cheaper. Compare this situation under two different regulatory schemes, a corrective tax and tradable permits. Which of the following is true?
A. If pollution is regulated with tradable permits then the technological advancement will result in further pollution reduction.
B. If pollution is regulated with tradable permits then the technological advancement will not affect the price of pollution.
C. If pollution is regulated with a corrective tax then the technological advancement will result in a fall in the price of pollution.
D. If pollution is regulated with a corrective tax then the technological advancement will result in further pollution reduction.
Answers: 3
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