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Economy - india

For a Regulator operating under uncertainity on the marginal cost of pollution control , the realtive slopes of Marginal Saving (MS) and Marginal Damage (MD) curves provide guidance on choosing right instrument - emission fee on market permit.

(i) If marginal Damage is more steeply sloped than the Marginal saving from pollution Marketable Permits are preferred, otherwise emission Fees are preferred.
(ii) If Marginal Damage is less steeply sloped than Marginal Saving from pollution, marketable Permits and preferred , otherwise emission fees are preferred.
(iii) If marginal damage is more steply sloped than the Marginal Saving from pollution ,Emission Fees are preferred , otherwise Marketable permits are prefered.


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