In our discussions of optimal pollution and pollution taxes
we imagined that it would be possible to compute the marginal
costs and benefits of externalities. We also acknowledged that
it is very difficult, if not impossible, to make these calculations.
If we can't obtain the information necessary to determine optimal
levels of externalities, can we at least minimize the cost of
whatever amount of abatement has been decided upon? Marketable
pollution credits may make this possible.
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