Question

Compared to when marginal enforcement costs are ignored in the determination of
efficient level of emissions, inclusion of marginal enforcement costs would suggest

Answer 1

Whenever emissions have to be reduced, it involves a few costs. The main costs are:

• costs incurred by the polluting firms in order to reduce emissions
• costs incurred by the government to impose the regulations

If these costs are ignored completely, the market will settle at a higher level of emissions and a lower cost of emission. In other words, firms will pollute more and they will ignore the external costs imposed on society.

To correct this, emissions have to be reduced. Higher is the level of abatement required, higher will be the marginal enforcement cost.

Thus, in brief:

Compared to when marginal enforcement costs are ignored in the determination of
efficient level of emissions, inclusion of marginal enforcement costs would suggest a higher cost of emissions and a lower level of emissions.