Market-based approaches to pollution control are, in a sense, self-policing: Firms work toward emitting the economically efficient level of pollution.

Question

Quizplus · Accepted Answer

Market-based approaches to pollution control, such as carbon taxes or cap-and-trade systems, incentivize firms to reduce emissions to an economically efficient level. Firms face a cost for polluting (either through taxes or the need to purchase emissions permits) and thus have a financial incentive to reduce their emissions to minimize costs, effectively making the system self-policing.

Market-Based Approaches to Pollution Control Are, in a Sense, Self-Policing