C H A P T E R 11 REGULATING POLLUTION ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

FIGURE 11.1 Schematic of interactions among government, polluting firms, and consumer citizens. ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

FIGURE 11. 2 Illustration of permit trading for two firms FIGURE 11.2 Illustration of permit trading for two firms. MS1, marginal savings from emitting, firm 1; MS2, marginal savings from emitting, firm 2; e*, equilibrium holding of permits; p*, equilibrium price of permits. ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

FIGURE 11.3 An illustration of precaution and liability. ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

FIGURE 11.4 Environmental regulators face a complex task. ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.