Final answer:
A polluter might prefer an emission standard over an emission tax due to the certainty and ease of managing compliance costs associated with standards compared to the potential variability and higher costs of a tax. While an emission tax incentivizes finding cost-effective ways to reduce emissions, it can be difficult to manage if the company faces high abatement costs.
Step-by-step explanation:
A polluter might prefer an emission standard to an emission tax because the standard sets a clear limit to emissions, thus providing certainty and stability for the polluter's operations; whereas an emission tax fluctuates based on the polluter's ability to reduce emissions and could incur higher costs if the company is unable to find cost-effective pollution controls. With an emission standard, a polluter may find it easier to predict and manage compliance costs, rather than contending with the variability and potentially high costs associated with an emission tax, especially if the firm faces high costs for reducing emissions.
A pollution tax creates an economic incentive to reduce pollution by making it more expensive to emit pollutants, encouraging firms with lower abatement costs to find cheap, effective ways to reduce emissions. Firms with higher abatement costs may choose to pay the tax instead of implementing cost-prohibitive pollution controls. However, a pollution tax requires the government to obtain accurate information on abatement costs, which can be challenging. The tax is designed to be uniform, with no special exemptions for politically connected producers, setting a level economic playing field. By contrast, an emission standard is more straightforward but can be perceived as less flexible.