Reference no: EM13184001
a paper recycling facility is proposed ofr a town. because of the bleaches and other chemicals used in paper recycling, there are concerns about the air and water pollution from the plant. a team of economists has studied the facility. the total benefits associated with the facility (including teh benefits of not using virgin forest for paper) are estimated to be $10 million; the total costs (including environmental costs) are estimated to be $5 million. let's consider different scenarios for examining whether the plant is likely to be built.
(a) is it efficient ot build this facility? why or why not?
(b) suppose that the plant is located inside the town, which expects to bear all the benefits and costs (which are evenly disributed across the opoulation). if there were a vote on wheter to build the plant, would you expect it to be built? why or why not?
(c) suppose that the plant is located inside the town, which expects to bear all teh banbefits and costs. now the benefits all go to a small group in teh town, while the costs are spread amoung the majority. if there were a bote on whether to build the plant, would you expect it to be built? why or why not?
(d) suppose that the plant is located insdie the town, which expects to bear all the benefits and costs. the benefits all go to a small group in the town, while the costs are spread amoung the majority. now one city manager decides on the project. udner what conditions might the plant be built? under what conditions might the plant not be built?
(e) suppose that the plant is located just outside the town. while the poepl ein the town will disproportionately bear the costs of teh facility, those who will decide whether it should be built are in the rural area outside of town. would you expect the plant to be built? why or why not?
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