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Assume the damages resulting from a particular type of pollution are uncertain. Policy makers are able to asses the average level of damages, and can choose a policy instrument that will internalize the average level of externality leading to what would appear to be an efficient level of output. Explain why this apparent efficiency might actually result in too much pollution.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9480190

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