Total pollution is increased when firms are allowed to trade in carbon credits.

Question

Quizplus · Accepted Answer

Trading in carbon credits allows firms to shift their emissions to other companies instead of reducing their own emissions. This can lead to a net increase in pollution if the firms buying the credits do not actually reduce their own emissions. Therefore, total pollution does not necessarily increase, but the potential for it to increase exists.

Total Pollution Is Increased When Firms Are Allowed to Trade