Market-oriented environmental tools _______ for firms to take the social costs of pollution into account and _______ in reacting to these incentives.
A) draw distinctions; lower the social costs incurred
B) lack incentives; prohibit firms from having flexibility
C) create incentives; allow firms some flexibility
D) specify particular technology; lower the social costs incurred

Question

Quizplus · Accepted Answer

Market-oriented environmental tools, such as taxes and tradable permits, create incentives for firms to internalize the social costs of pollution. They also provide firms with the flexibility to choose how to reduce emissions, encouraging innovation and cost-effective pollution control strategies.

Market-Oriented Environmental Tools _______ for Firms to Take the Social