A . Imagine that the state of Georgia decides to reduce emissions from chemical plants by taxing the production of chemicals. Will this reduce chemical plant emissions in the state? Will your answer to this question depend on whether or not Alabama has

a similar tax? b. Will this tax protect Georgians from the negative externalities associated with these emissions? Will your answer to this question depend on whether or not Alabama has a similar tax?

a . The tax will reduce emissions in Georgia since it increases the cost of production, regardless of
whether or not Alabama has a similar tax
b. Georgians will be protected from the negative externalities only if production does not move to other
places. If Alabama (and other states and nations) has a similar tax in place, then negative externalities
will be reduced. If Alabama (and other states and nations) does not enact a similar tax, then production
will tend to move out of Georgia and into these nontaxing locations. Total production will not tend to
decrease, and Georgians may still suffer from the negative externalities that spill over into Georgia
from Alabama .