Principles of Microeconomics / Unit 11 MIC 1007 short lesson, about 20 seconds
A Pollution Charge
Captions available
The idea
A pollution charge is a tax on each unit emitted. A firm abates every unit cheaper to prevent than the tax and pays on the rest, so cheapest abatement happens first.
In practice
The tax is unit four's wedge, aimed at the external cost.
Where people slip
Set at the external cost per unit, the charge reaches the social optimum; set too low, it changes little.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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