Which of the following statements is not 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)Both policies increase the amount of pollution compared to the market equilibrium.

Question

Quizplus · Accepted Answer

Both pollution permits and corrective taxes are designed to reduce pollution by internalizing the externality, not increase it. They make firms accountable for their pollution, aiming to bring pollution levels to a socially optimal level rather than increasing it.

Which of the Following Statements Is Not True of Both