environmental protection.

However, economists are united in their belief that an inefficient choice such as M is undesirable. Rather than

choosing M, a nation could achieve either greater economic output with the same environmental protection, as

at point Q, or greater environmental protection with the same level of output, as at point S. The problem with

command-and-control environmental laws is that they sometimes involve a choice like M. Market-oriented

environmental tools offer a mechanism for providing either the same environmental protection at lower cost,

or providing a greater degree of environmental protection for the same cost.

BRING IT HOME

Keystone XL
How would an economist respond to claims of environmental damage caused by the Keystone XL project? Clearly,

we can consider the environmental cost of oil spills a negative externality, but how large would these external costs
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