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Clearly, if pollution is reduced at the sources where the costs are lower, total social costs of pollution control will be less. EIs leave the polluters with choices about the level of pollution abatement at the individual source and about the technology used to achieve pollution control. Together with the economic incentives of polluters to minimize their costs, this flexibility means that pollution control can be achieved at the lowest cost. The real cost savings from the use of EI will depend on "how bad" actual CAC regulation is. A bad CAC regulator imposes uniform standards across all sources...
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