Inefficiency of Output Reduction Policies When Cleaner Technologies Exist
Policies designed to reduce output, such as quotas or taxes, are predicated on the assumption that a negative externality is an inherent part of production. This approach becomes inefficient if cleaner alternative technologies exist. A superior Pareto outcome is achievable when producers adopt less-polluting methods, which can allow them to increase output and profits without disadvantaging the parties affected by the externality. The case of chlordecone alternatives in Guadeloupe and Martinique provides a real-world illustration of this concept. [3]
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
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Learn After
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