Graph of marginal benefits and costs of abatement curve

Reference no: EM13693880

Examine the graph of marginal benefits and costs of abatement below. Suppose regulators expect these curves to be as shown but are uncertain as to whether or not the marginal costs of abatement curve will be higher or lower than depicted. If regulators must choose between an emissions tax or tradable quotas, which would be preferred from the perspective of efficiency, given the uncertainty in costs of abatement? Explain in a short paragraph and illustrate on this graph.

Reference no: EM13693880

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