EC238 Chapter Notes - Chapter 4: Allocative Efficiency, Marginal Cost, Social Cost
Document Summary
Ambient standard: a standard that designates the quality of environment to be achieved, typically expressed as a maximum allowable pollutant concentration. Uses the other two standards to reach this goal. Technology-based standard: a standard that designates equipment or method to be used to achieve some abatement level. For example: epa might require all coal-burning power plants to use a scrubber system. Performance-based standard: a standard that specifies a pollution limit to be achieved but does not stipulate the technology. This allows polluting sources to choose how they will reduce pollution, as long as they meet the limit. Allocatively efficient standards: standards set such that the associated marginal social cost (msc) of abatement equals the marginal social benefit (msb) of abatement. Marginal social benefit of abatement: in damages or costs caused by pollution. A measure of the additional gains to society as pollution abatement increases. Think of msb as a measure of the reduction.
