Tradable allowances:
A) are typically hard to pass through the Environmental Protection Agency (EPA) since they allow firms to legally pollute.
B) are an efficient way to reduce pollution at lower costs.
C) decrease the profitability of firms since now they have to pay for the rights to pollute.
D) are equal to the social surplus in the market.

Question

Quizplus · Accepted Answer

Tradable allowances create a market for pollution permits, allowing firms to trade their emission rights with one another. This system incentivizes companies to reduce emissions, rewards those who do so successfully, and lowers the overall cost of pollution reduction for society as a whole.

Tradable Allowances