A government agency is tasked with setting a per-unit tax on a factory that emits a pollutant into a river, harming a downstream fishing community. To achieve an economically efficient outcome, the tax should ideally equal the harm caused by each additional unit of pollution. Based on this, what is the most significant obstacle the agency will face in designing an effective and fair policy?

The Beekeeper and the Orchard

Evaluating a Noise Pollution Policy

The Challenge of Implementing an Environmental Tax

A government can guarantee a socially optimal outcome by taxing a polluting industry, as long as it has the political authority to set the tax and knows the industry's production costs.

A government attempts to correct for a negative externality from a factory by imposing a per-unit tax on its output. Policymakers estimate the marginal external cost to be $20 per unit and set the tax at that level. However, the true marginal external cost is later determined to be $35 per unit. What will be the resulting market outcome?

A government agency wants to implement a tax on a chemical factory to account for the pollution it releases into the atmosphere. The agency's goal is to set a tax equal to the marginal harm caused by the pollution. After a thorough study, they estimate this harm to be $50 per ton of chemical produced and set the tax accordingly. If the true marginal harm is actually $80 per ton, what will be the outcome in the market for this chemical?

The Congestion Charge Dilemma

Comparing Policy Tools Under Uncertainty

Quantifying the Social Cost of Urban Congestion

The Challenge of Implementing an Environmental Tax