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)corrective taxes distort incentives.
C)pollution permits generate more revenue for the government than a corrective tax.
D)it is hard to estimate the market demand curve and thus charge the right corrective tax.

Question

Quizplus · Accepted Answer

Tradable pollution permits can be more effective when it's difficult to estimate the correct level of a corrective tax, as permits allow the market to determine the price of pollution.

In Some Cases, Tradable Pollution Permits May Be Better Than