Suppose the corrective tax policy and the number of pollution permits available do not change in spite of this demand shift. As a result of the technology change, the price of pollution will change under , and the quantity of pollution will change under

As a result of the technology change, the price of pollution will be same as price of pollution with pollution permits.

The quantity of pollution with corrective tax will be lower than quantity of pollution with pollution permits.

Explanation:

The pollution permits are issued to reduce pollution by firms. The companies will reduce the pollution and will only be able to emit pollution up to certain limit. The price of pollution with corrective tax will be same as the price of pollution with pollution permits.

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