Suppose that there are two firms, each generating three tons of SO₂. Suppose also that the government has set a target abatement level of two tons. Under a policy of uniform abatement with permits, each firm would receive
A) two non-transferable pollution permits.
B) two pollution permits which they could sell to each other.
C) one pollution permit with a value equal to that firm's cost of abating one ton of SO₂.
D) one pollution permit with a value equal to the market price for a pollution permit.

Question

Quizplus · Accepted Answer

Under a policy of uniform abatement with permits, each firm would receive an equal number of permits, which would be non-transferable.

Suppose That There Are Two Firms, Each Generating Three Tons