Economics 1, short essay question. only one-two paragraphs needed. Please post here.
Question:
Suppose that the government wishes to decrease amount of lead and mercury released during the production of electricity in coal fired power plants. First, discuss intuitively why government regulation may be required in this market - would the market likely reduce the amount of these pollutants on its own - why not? Second, discuss the advantages and disadvantages of the two following regulations: (i) Impose the use of scrubbers (filters) on coal fired power plants so that the pollutants are captured before being released into the atmosphere or (ii) impose a tax based on the amount of lead and mercury released during the production of electricity. In the long run which regulation will more efficiently lower the level of mercury and lead in the atmosphere?