In practice, taxes on emissions of pollutants have been found to
A)be ineffective in encouraging firms to pollute less.
B)significantly reduce pollution by taxed firms.
C)be less reliable in reducing pollution than direct controls on pollution.
D)cause failures of the pricing system.

Question

Quizplus · Accepted Answer

Taxes on emissions of pollutants have been found to significantly reduce pollution by taxed firms. This is because these taxes increase the costs of polluting emissions, making it more expensive for firms to pollute, and thus encouraging them to reduce their emissions. Studies have shown that emissions taxes can be an effective tool for incentivizing firms to adopt cleaner technologies and processes, ultimately leading to reductions in pollution.

In Practice, Taxes on Emissions of Pollutants Have Been Found