The diagram below shows the market for tradable pollution permits. Figure 17- 7
-Refer to Figure 17- 7, which depicts the market for tradable pollution permits. If there is an increase in firms' marginal cost of pollution abatement,

Question

The diagram below shows the market for tradable pollution permits.  Figure 17- 7
-Refer to Figure 17- 7, which depicts the market for tradable pollution permits. If there is an increase in firms' marginal cost of pollution abatement,

Quizplus · Accepted Answer

An increase in the marginal cost of pollution abatement means it becomes more expensive for firms to reduce pollution on their own. As a result, firms will demand more pollution permits to avoid the higher costs of abatement.

The Diagram Below Shows the Market for Tradable Pollution Permits