Since the simple answers: "there is no pollution problem" or "only zero pollution is the right amount" offer us no real guidance; we are left with the more difficult but interesting problem of figuring out how much pollution is "optimal."

    As a matter of vocabulary, we will use pollution "abatement" to refer to pollution reduction. Pollution abatement has both costs and benefits. It takes time, effort, equipment, and materials to reduce pollution. Which is why firms resist it, pollution abatement increases their costs. But there are benefits: cleaner air and water means healthier happier lives, fewer sick days, and greater productivity.

    Like all microeconomic decision, we can think of the "efficient" solution as one in which the marginal benefits of abatement equal the marginal costs.

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