pollution standards

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The maximum acceptable level of pollution imposed by the government. Firms may, for example, be required to clean waste products up to some minimum standard before discharging them into rivers or sewers, or there may be standards of maximum tolerated emissions from road vehicles. Standards are an alternative to the use of the price mechanism to control pollution, by taxing emissions of polluting substances. A disadvantage of emission standards is that having reached this, a standard gives firms no incentive to reduce pollution further. Also, the costs of avoiding pollution are higher for some firms than others: a tax will reduce emissions where they are most cheaply avoided, whereas under a standard the marginal cost of reducing pollution to the permitted level may vary widely between firms.

Subjects: Economics.

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