In the case of an upstream paper mill that pollutes water used by a downstream power plant forcing the latter to clean the water it uses,the costs of pollution by the paper industry are borne by both the consumers and producers of electricity.

Question

Quizplus · Accepted Answer

The downstream power plant is forced to incur additional costs to clean the water. These costs are eventually passed on to the consumers of electricity in the form of higher electricity prices. Hence, both the consumers and producers of electricity bear the costs of pollution by the paper industry.

In the Case of an Upstream Paper Mill That Pollutes