Marketable permits comprise a system for a government to intervene in a market with externalities in order to reduce their effects by levying charges on the agents causing the externality in order to force them to reduce the externality to the acceptable level.

Question

Quizplus · Accepted Answer

Marketable permits, also known as cap-and-trade systems, involve setting a limit on pollution and allowing companies to buy, sell, or trade permits to emit a certain amount of pollution, rather than directly levying charges on agents causing the externality.

Marketable Permits Comprise a System for a Government to Intervene