Maximizing the Net Benefits of Pollution

Read this section about how to apply the Coase Theorem to solve environmental problems.

5. The Measurement of Benefits and Costs

Saying that the efficient level of pollution occurs at a certain rate of emissions, as we have done so far, is one thing. Determining the actual positions of the demand and marginal cost curves that define that efficient solution is quite another. Economists have devised a variety of methods for measuring these curves.