Although pollution is caused by a failure of the market, many economists believe that the best way to protect the environment is to utilize the price mechanism.

Question

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Economists often argue that by placing a price on pollution through measures such as carbon taxes or cap-and-trade systems, polluters are incentivized to reduce their emissions in order to avoid the financial cost. This is seen as a more efficient and market-oriented approach to environmental protection than government regulation or intervention.

Although Pollution Is Caused by a Failure of the Market