Giving a coal company the right to release 4,000 tons of mercury into the air per year, which it can either use or sell to another company, is an example of a market-based policy to eliminate pollution.

Question

Quizplus · Accepted Answer

This is an example of a cap-and-trade system, a market-based policy where a limit (cap) is set on emissions and companies are given allowances that they can use or trade (sell) to other companies. This incentivizes reducing emissions because companies that can reduce their emissions at lower costs can sell their excess allowances to companies for whom reducing emissions is more expensive.

Giving a Coal Company the Right to Release 4,000 Tons