One possible strategy for efficiently addressing the market failure that leads to environmental pollution is

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Tradable pollution permits would allow the government to set a limit on the amount of pollution that can be produced but still allows companies to trade permits among themselves. Companies that can reduce their pollution at a lower cost than the limit will sell their permits to those which have costs higher than the limit. This system incentivizes companies to produce clean energy or to use pollution reduction technologies in order to save money on permits, while companies that can't afford to comply with the limit can buy permits. Tradable pollution permits promote efficiency and flexibility, and ultimately reduce pollution at a lower cost than traditional direct controls.

One Possible Strategy for Efficiently Addressing the Market Failure That