Markets for the right to pollute are:
A)established by individual firms when they reduce emissions.
B)established by government when it issues tradable pollution permits.
C)likely to result in fewer incentives to develop and implement technology that reduces pollution.
D)a means by which more pollution is encouraged.

Question

Quizplus · Accepted Answer

Markets for the right to pollute are established by government when it issues tradable pollution permits. These permits allow firms to pollute up to a certain level and can be bought and sold. This system creates a market where the cost of reducing pollution is balanced with the cost of buying pollution permits. This incentivizes companies to reduce their emissions to save money on buying permits, and it creates a revenue stream for those who are successful in reducing their pollution levels. However, it is important to note that this system may not provide enough incentive to develop and implement technology that reduces pollution beyond the level required by the permit system.

Markets for the Right to Pollute Are