Suppose the federal government determines the total level of municipal sewage that can be discharged by cities along a river.If the cities are able to buy and sell rights to the total discharge level among themselves,then the government's environmental policy includes:
A)emissions taxes.
B)Pigouvian subsidies.
C)tradable pollution permits.
D)command and control.

Question

Quizplus · Accepted Answer

The scenario described refers to the use of tradable pollution permits as a policy tool. This mechanism allows the government to set a limit on the total amount of pollution that can be generated by a group of polluters, and then to allocate permits to individual firms, giving them the right to emit up to a certain amount. Firms that are able to reduce their pollution levels more than required can sell their permits to others who find it harder to cut emissions. This creates an incentive for firms to find and implement cost-effective ways to reduce pollution levels.

Suppose the Federal Government Determines the Total Level of Municipal