Suppose a firm wants to build a new factory that would add pollution to an already polluted area. Under an offset program, the firm must:

Question

Quizplus · Accepted Answer

The purpose of an offset program is to reduce overall pollution in an area, so the firm must offset the pollution created by the new factory by reducing or eliminating an old pollution source in the same area. Installing scrubbers and other equipment may be required by the government but may not necessarily offset the pollution, purchasing pollution permits only compensates for the pollution but does not reduce it, and a tax would not necessarily incentivize pollution reduction or elimination.

Suppose a Firm Wants to Build a New Factory That