Which of the following statements is true of both pollution permits and corrective taxes?
A)Both policies internalize the externality of pollution.
B)Both policies require firms to pay for their pollution.
C)Both policies lead to the establishment of an equilibrium price of pollution.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Both pollution permits and corrective taxes internalize the externality of pollution by making firms accountable for their pollution output. Both policies also require firms to pay for their pollution, either through purchasing permits or paying a tax. Additionally, both policies lead to the establishment of an equilibrium price of pollution in the market. Therefore, all of the statements are correct.

Which of the Following Statements Is True of Both Pollution