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Assume the MCA for a pollutant is almost vertical (e.g. MAC = 1000X) and the...

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Accounting

Assume the MCA for a pollutant is almost vertical (e.g. MAC = 1000X) and the MBA has a standard slope (e.g. MB = 100 X). Also, assume the government underestimates the actual costs of abatement (they think it is cheaper to abate than it is). Which policy will be more economically efficient, a tax or a cap (or are they equal in efficiency)? Show your answer with a graph and write which will be the most efficient policy.

Sidenote: MAC is marginal abatement cost

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