Tradeable effluent permit markets can lead to cost savings as long as polluting sources face different marginal abatement costs to control the same pollutant.

Question

Quizplus · Accepted Answer

Tradeable effluent permit markets allow firms with low marginal abatement costs to sell excess permits to firms with higher marginal abatement costs, leading to overall cost savings in reducing pollution. However, if all polluting sources face the same marginal abatement costs to control the same pollutant, then there will be no cost savings from permit trading.

Tradeable Effluent Permit Markets Can Lead to Cost Savings as Long