Short Answer

Evaluating Policy Tools for Industrial Pollution

A government wants to reduce pollution from its aging industrial sector. It is considering two options: 1) Mandating that all factories install a specific, government-approved filtering technology, or 2) Imposing a tax on each unit of pollution emitted. From an economic perspective, which policy is generally considered more efficient at achieving pollution reduction at the lowest overall cost to society? Briefly explain your reasoning.

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Updated 2025-08-25

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