environmental protection have focused on governmental limits on how much of each pollutant could be

emitted. While this approach has had some success, economists have suggested a range of more flexible,

market-oriented policies that reduce pollution at a lower cost. We will consider both approaches, but first let’s

see how economists frame and analyze these issues.

12.1 The Economics of Pollution

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Explain and give examples of positive and negative externalities

•

Identify equilibrium price and quantity

• Evaluate how firms can contribute to market failure

From 1970 to 2020, the U.S. population increased by 63 percent, and the size of the U.S. economy increased by

more than 3.8-fold. Since the 1970s, however, the United States, using a variety of anti-pollution policies, has

made genuine progress against a number of pollutants. Table 12.1 lists the change in carbon dioxide
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