Under a transferable emissions permit system with n possible polluters, the government enforces the total amount of emissions allowable at X units by:
A) setting a different fee for each firm so that each firm chooses to emit X/n units.
B) setting the same fee for each firm so that each is forced to emit X/n units.
C) setting a different standard for each firm, with X/n being the average.
D) setting the same standard for each firm at X/n.
E) issuing X permits.

Question

Quizplus · Accepted Answer

Under a transferable emissions permit system, the government issues a limited number of permits equal to the total allowable emissions. Each polluter is then given a number of permits based on their emissions limit. They can buy or sell permits as needed. This creates a market for emissions permits where polluters can choose to reduce their emissions or buy permits from others who have reduced their emissions. This allows for flexibility and the most cost-effective method for achieving the desired total emissions reduction.

Under a Transferable Emissions Permit System with N Possible Polluters