A market for pollution permits can efficiently allocate the right to pollute by using the forces of supply and demand.

Question

Quizplus · Accepted Answer

A market for pollution permits creates a system where companies can buy and sell the right to emit pollutants, thus using the forces of supply and demand to allocate these rights efficiently. Companies that can reduce emissions at lower costs will do so and sell their permits, while those facing higher costs to reduce emissions will buy permits, leading to a cost-effective way to control pollution.

A Market for Pollution Permits Can Efficiently Allocate the Right