In cap-and-trade programs where the damages are non-uniform, there is a direct trade-off between the hydrological and meteorological reasons for restricting trade and
A) the economic efficiencies that result from competition.
B) the political resistance to taxation.
C) the enforcement authority of the EPA.
D) the incentives for R&D.

Question

Quizplus · Accepted Answer

In order to restrict trade based on non-uniform damages, policymakers must balance the hydrological and meteorological factors that contribute to those damages against the economic efficiencies that come with a more competitive market. This requires making trade-offs between protecting the environment and promoting economic growth. Political resistance to taxation, the enforcement authority of the EPA, and the incentives for R&D may also play a role, but they are not directly related to the trade-off between hydrological and meteorological factors and economic efficiency.

In Cap-And-Trade Programs Where the Damages Are Non-Uniform, There Is