Question

Economists typically prefer regulations to corrective taxes because regulations provide more incentives for firms to seek continued reductions in pollution?

Answer 1

Economists actually prefer corrective taxes to regulations for pollution reduction as they incentivize firms to find cost-efficient ways to lower emissions, contrary to the statement in the question.

Step-by-step explanation:

The statement in question is actually not aligned with the typical view of economists. Economists usually prefer corrective taxes over regulations as a means to address pollution, because these taxes create an economic incentive for pollution reduction. A pollution tax encourages firms to seek the least expensive ways to reduce emission because it becomes a cost-saving measure. Firms that can reduce pollution at a lower cost will do so in order to minimize their tax burden, while those that find it expensive to reduce emissions may choose to pay the tax. This ensures that pollution reduction occurs in the most cost-efficient manner without creating loopholes or favoritism for well-connected firms.