Which of the following allows the greatest value to be generated with a given amount of pollution?
A)Pollution tax
B)Regulatory guidelines
C)Compliance standards
D)Pollution rights

Question

Which of the following allows the greatest value to be generated with a given amount of pollution?
A)​Pollution tax
B)​Regulatory guidelines
C)​Compliance standards
D)​Pollution rights

Quizplus · Accepted Answer

Pollution rights allow for the greatest value to be generated with a given amount of pollution because they allocate a specific amount of pollution that can be traded in a market. This allows firms to find the most cost-effective way to reduce pollution and those who can reduce it at a lower cost can sell their unused permits to other firms who may find it more costly to reduce pollution. This creates an efficient market for pollution reduction. Pollution taxes can also be effective in reducing pollution, but they do not necessarily lead to the most efficient reduction as firms may not have the same cost of reducing pollution. Regulatory guidelines and compliance standards are less efficient as they do not allow for the flexibility of trading pollution permits.

Which of the Following Allows the Greatest Value to Be