Final answer:
The statement that 'If the government is uncertain about marginal abatement costs, a fee will always introduce less of a distortion than an emission standard' is false.
Step-by-step explanation:
The statement that 'If the government is uncertain about marginal abatement costs, a fee will always introduce less of a distortion than an emission standard' is false.
While both fees and emission standards are used as policy tools to regulate pollution, the choice between them depends on various factors. If the government is uncertain about the marginal abatement costs, it may choose to implement an emission standard instead of a fee.
An emission standard sets a limit on the amount of pollutants that can be emitted, while a fee is a tax on each unit of pollution emitted. The advantage of an emission standard is that it ensures a certain level of environmental performance, while a fee provides economic incentives for firms to reduce pollution.
However, the effectiveness of both policy tools depends on the specific circumstances, such as the characteristics of the pollutant, the industry, and the information available to the government.
In some cases, a fee may be preferred over an emission standard if it is difficult to set an appropriate standard or if the government wants to give firms flexibility in choosing how to reduce pollution.