Under a system of marketable pollution permits, a firm with relatively low abatement costs will buy permits from a firm with relatively high abatement costs.

Question

Quizplus · Accepted Answer

In a system of marketable pollution permits, a firm with relatively low abatement costs is less likely to buy permits because it can reduce pollution at a lower cost than purchasing permits. Conversely, a firm with high abatement costs would prefer to buy permits as reducing pollution is more expensive for them.

Under a System of Marketable Pollution Permits, a Firm with Relatively