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<br />~ <br />o <br />0) <br />,:J') <br /> <br />. <br /> <br />Responses to economic incentives, then, may be expected to <br /> <br />take the form of reduced production (where effluent taxes are imposed <br /> <br />. <br /> <br />to increase the Pw so that .it includes pollution costs or to cause oth- <br /> <br />er inputs or altered technological inputs to be used (where incentives <br /> <br />. <br /> <br />are applied). Productivity may be or may not change in the latter case. <br /> <br />Social taxes or subsidies must be equal to downstream disbenefits if <br /> <br />equitable maxi.mization is to be expected. In effect, these subsidies <br /> <br />. <br /> <br />or taxes .are imposed by the public sector acting as a sort of agent for <br /> <br />downstream users. The amount of adjustment will depend upon the <br /> <br />. <br /> <br />elasticities of the demand for both the output (TWP) and the inputs <br /> <br />48 <br />(OPX/ow). <br /> <br />Applying economic incentives to diffuse source pollution most <br /> <br />. <br /> <br />likely will take the form pf either a charge for diversions, or an incen- <br /> <br />tive payment to utilize alternative technology. As in the case of point <br /> <br />sources, effluent charges levied on diversions will reduce production, <br /> <br />. <br /> <br />and incentives mayor may not change production. <br /> <br />Administrative Controls <br /> <br />. <br /> <br />Constraints applied to activities may take two forms: (l) prohi- <br /> <br />bition or restriction of that activity; or (2) standards imposed on activ- <br /> <br />ities for effluent levels. These types of constraints are most often <br /> <br />. <br /> <br />used due to the lack of institutions for economic bargaining between <br /> <br />users. In addition, it appears much cheapter for downstream users to <br /> <br />. <br /> <br />litigate or lobby than to contribute economicincentives (i. e., to bribe <br /> <br />28 <br /> <br />. <br />