Under a system of marketable pollution permits
A) firms can trade away their right to pollute.
B) the amount of pollution an individual firm can generate is determined by the number of permits issued to it by the government.
C) the production costs for firms are not affected.
D) the government controls the production process of firms who pollute.

Question

Quizplus · Accepted Answer

Under a system of marketable pollution permits, firms are allowed to trade away their right to pollute. This means that a firm can sell its unused permits to another firm that needs them. This creates an incentive for firms to reduce pollution because they can profit from selling unused permits. This also allows for a market-based solution to pollution control without the need for government intervention in production processes.

Under a System of Marketable Pollution Permits