What is one advantage of allowing a market for pollution permits to control the total amount of pollution released in an area
A)The government knows exactly how much each firm is allowed to pollute.
B)Government revenue from the sale of permits is greater than revenue from a corrective tax.
C)The initial allocation of permits to firms does not affect the efficiency of the market.
D)Firms will work together to eventually eliminate pollution.

Question

Quizplus · Accepted Answer

Allowing a market for pollution permits ensures that the total amount of pollution released is controlled efficiently, as the market determines the optimal allocation of permits among firms. Once the permits are allocated, the firms can then buy and sell permits amongst themselves, which creates an efficient market for pollution control. The initial allocation of permits to firms does not affect the efficiency of the market as the permits can be bought and sold.

What Is One Advantage of Allowing a Market for Pollution