Regulation Or Taxation?

Suppose that there are two polluters in a city, both releasing COX2\ce{CO_2} into the atmosphere. One is a paper mill and the other is a power plant. The marginal damage from each ton of COX2\ce{CO_2} they produce is $1,000\$1,000, but they have different marginal costs to reduce that pollution, as represented by the graph to the right.

What's the most efficient solution for the government to reduce 400 tons of COX2\ce{CO_2}? To establish a tax of $1,000\$1,000 per ton of COX2\ce{CO_2} produced? Or to be fair, establish a policy that forces each plant to separately cut 200 tons of COX2\ce{CO_2}? Assume that either taxation or regulation is enforceable and that an efficient solution means economically efficient.

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