In this research note, we focus on a representative leather-producing tannery in Kanpur, India and shed light on two specific questions that, to the best of our knowledge, have not been studied previously in the literature. First, what is the deadweight loss from water pollution caused by this tannery? Second, how might an effluent fee be used to ensure that the socially optimal amount of leather is produced by this same tannery? Our linear model provides answers to these two questions and also shows how our results can be used to guide pollution regulation policy.
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