Which of the following is a way that the government runs a system of marketable pollution permits?

Question

Quizplus · Accepted Answer

The government sets a target pollution level that companies are allowed to emit, and issues a limited number of permits that companies can purchase in order to emit a certain amount. This creates a market-based incentive for companies to reduce their emissions, as they can sell any excess permits they do not need. If the government were to oversupply the market with permits (choice B), this would decrease the value of each permit and reduce the incentive for companies to reduce their emissions. Prohibiting the trading of permits (choice C) would eliminate the market-based incentive altogether. Therefore, the correct answer is A - the government sets a target pollution level.

Which of the Following Is a Way That the Government