Which statement explains the difference between command and control policies and tradable allowances?
A) Command and control policies are a government solution to externalities, whereas tradable allowances are a type of private market solution.
B) Tradable allowances allow for less flexibility than command and control policies.
C) Command and control policies require all firms to reduce pollutants by a specific quantity, whereas tradable allowances allow some firms to pollute more than others by trading for pollution rights.
D) Tradable allowances sometimes result in higher overall levels of pollutants because firms can simply purchase the rights to pollute more, whereas the quantity of pollution is fixed under command and control.

Question

Quizplus · Accepted Answer

Command and control policies mandate specific limits or technologies for pollution reduction, while tradable allowances create a market for pollution rights, allowing firms to trade and potentially pollute more if they purchase additional allowances.

Which Statement Explains the Difference Between Command and Control Policies