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Business, 07.03.2020 05:14 cam6836

Suppose you could impose a perfectly enforceable carbon tax either upstream onproducers (e. g., Exxon pays a tax when it extracts petroleum) or downstream onconsumers (e. g., consumers pay the tax when they fill up their car with gasoline).

If the tax is imposed upstream versus downstream, economic theory predicts that this will lead to the same allocation of abatement activity, but it will change who bears the burden (incidence).

a. True
b. False

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