A nationwide system of marketable pollution permits will reduce pollution overall, but might increase pollution in some high abatement cost areas.

Question

Quizplus · Accepted Answer

The system of marketable pollution permits creates a market where companies can buy or sell these permits, allowing them to emit a certain amount of pollutants. This system creates an incentive for companies to reduce their pollution levels below their permitted limit, allowing them to sell their unused permits to other companies. As a result, pollution overall is reduced. However, the cost of reducing pollution varies across industries and regions. Companies in high abatement cost areas may not be able to reduce their pollution levels as easily and may end up buying more permits, increasing pollution in those areas.

A Nationwide System of Marketable Pollution Permits Will Reduce Pollution