An advantage of pollution taxes that is NOT offered by command-and-control policies is that
A) with a pollution tax zero pollution is produced.
B) a pollution tax decreases the price of the polluting good.
C) with a pollution tax, firms have flexibility in their choice of strategies to use to clean up pollution.
D) a pollution tax decreases the demands for goods that cause pollution.

Question

Quizplus · Accepted Answer

With a pollution tax, firms are given an incentive to figure out how to produce fewer emissions, but are allowed to choose the best strategy for their business. Command-and-control policies in contrast tell businesses exactly what they can and cannot do to address pollution. Therefore, flexibility is an advantage offered by pollution taxes that is not present in command-and-control policies. None of the other options are advantages of pollution taxes over command-and-control policies.

An Advantage of Pollution Taxes That Is NOT Offered by Command-And-Control