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Consider two cities each of which initially experiences 100 tons of pollution per day 50 tons from each polluting firm City T imposes a pollution tax resulting in an

Consider two cities, each of which initially experiences 100 tons of pollution per day (50 tons from each polluting firm). City T imposes a pollution tax, resulting in an overall pollution reduction of 20 percent and a decrease in equilibrium employment. City U implements a uniform-reduction policy under which each firm cuts its pollution by 20 percent. Which city will experience a larger reduction in equilibrium employment? Illustrate.

Feb 07 2020 View more View Less

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