Emissions taxes lead to
A) a larger reduction in emissions from firms with lower abatement costs.
B) a larger reduction in emissions from firms with higher abatement costs.
C) an equal distribution of emissions reductions among firms with different abatement costs.
D) a different emission tax applied to firms depending on their abatement costs.

Question

Quizplus · Accepted Answer

Emissions taxes incentivize firms with lower abatement costs to reduce emissions more significantly because it is cheaper for them to do so than to pay the tax, leading to a cost-effective way of reducing overall emissions.

Emissions Taxes Lead to