Suppose the government sets the total level of pollutants that can be discharged by city industries and that cities buy and sell the rights to pollute at levels below the cap. This illustrates:

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This scenario describes a cap and trade system, where the government sets a cap on total emissions and allows industries to buy and sell permits to pollute within that limit. This incentivizes companies to reduce their emissions in order to profit from selling their unused permits, while also allowing for economic flexibility and innovation in reducing pollution.

Suppose the Government Sets the Total Level of Pollutants That