When the government determines the permissible level of pollution and issues permits to each polluting firm,this is a form of

Question

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This is an example of incentive-based regulation because it allows firms flexibility in how they reduce pollution, potentially trading permits among themselves to achieve overall pollution reduction in a cost-effective manner. Command-and-control regulation, on the other hand, would dictate specific limits or technologies to each firm without the flexibility of trading permits.

When the Government Determines the Permissible Level of Pollution and Issues