In some circumstances, selling pollution permits may be better than levying a corrective tax.

Question

Quizplus · Accepted Answer

Selling pollution permits can be more effective than levying a corrective tax in certain situations because it allows for a fixed limit on the total amount of pollution, providing certainty about environmental outcomes, while also giving firms flexibility to trade permits based on their individual reduction costs.

In Some Circumstances, Selling Pollution Permits May Be Better Than