In some cases, pollution permits may be better than a Pigovian tax because:
A)Pigovian taxes reduce pollution by a greater amount than pollution permits
B)pollution permits generate more revenue for the government than a Pigovian tax
C)pollution is difficult to measure
D)the government has more explicit control over the quantity of pollution created with permits

Question

Quizplus · Accepted Answer

Pollution permits allow the government to set a specific quantity of pollution that is acceptable, giving them more explicit control over the amount of pollution created. In contrast, a Pigovian tax only provides an incentive to reduce pollution, but does not guarantee a specific level will be achieved. Additionally, pollution permits can be more effective in industries where pollution levels are easier to measure and monitor.

In Some Cases, Pollution Permits May Be Better Than a Pigovian