If the government wanted to efficiently limit the emission of Carbon Monoxide by all firms to exactly four million tons it could

Question

Quizplus · Accepted Answer

By issuing pollution rights worth four million tons and allowing firms to trade in a market, the government can create a market-based solution to efficiently reduce emissions. This approach incentivizes firms to reduce their emissions to a level below their allocated quota and allows those that have reduced their emissions to 'sell' their unused quota to those that emit more than their quota. This provides an incentive for firms to innovate and find ways to reduce their pollution levels while minimizing the economic cost.

If the Government Wanted to Efficiently Limit the Emission of Carbon