Tradable pollution permits are a:
A)tax system for internalizing pollution costs to the market.
B)subsidy system for charging consumers for the use of common property resources.
C)system of voluntary negotiations between polluters and damaged parties.
D)system of exchangeable licenses that enable the holder to pollute up to a specified amount during a given period.

Question

Quizplus · Accepted Answer

Tradable pollution permits are simply licenses that allow the holder to pollute up to a specified amount during a given period. They create a market for pollution, where permits can be bought and sold, allowing companies to choose the most cost-effective way to reduce their pollution. This system incentivizes companies to reduce their emissions below their allotted level and sell the excess permits to other companies who may not have the resources to reduce their emissions to the same extent. This system creates a cap on total emissions and incentivizes companies to reduce their emissions in a cost-effective and efficient way.

Tradable Pollution Permits Are A