DISCUSSION QUESTIONS for Lec 25: Chpt 16. Pollution (B)

1) What are the different ways to allocate tradable pollution permits? Which one is generally preferred?

2) How will industries react to technology change with a pollution tax? How will they react with a system a transferable permits?

3) List and discuss a situation where emissions standards would be preferable to either pollution taxes or a system of transferable permits?

4) Using a graph with a marginal cost of control curve and a marginal cost of damage curve, present an example where a pollution tax would be preferable (less risky) than a system of transferable permits.

5) What are some particular problems with stock pollutants? Why might a reduction in emissions levels of a stock pollutant be ineffective in reducing the negative effects of the pollutant?