In some cases, tradable pollution permits may be better than a corrective tax because
A)pollution permits allow for a market solution while a corrective tax does not.
B)pollution permits generate more revenue for the government than a corrective tax.
C)pollution permits are never preferred over a corrective tax.
D)the government can set a maximum level of pollution using permits.

Question

Quizplus · Accepted Answer

Tradable pollution permits allow the government to set a maximum allowable level of pollution by limiting the number of permits issued, whereas a corrective tax only sets a price on pollution. This means that pollution permits can be more effective in achieving a specific pollution reduction target. Additionally, pollution permits allow for market-based solutions by enabling firms that can reduce pollution at lower costs to sell their permits to those firms that would face higher costs to reduce pollution.

In Some Cases, Tradable Pollution Permits May Be Better Than