Undermining cost-effectiveness by creating a bias


Problem: Write True or False:

Please clearly label each statement True or False and explain your reasoning.

1) Price-based instruments like taxes are always better than quantity-based instruments.

2) Vintage differentiated regulation can undermine cost-effectiveness by creating a bias against new capital investments.

3) The market can always be relied upon to achieve dynamically efficient extraction of a nonrenewable resource.

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