Tradable pollution permits Flashcards
(4 cards)
1
Q
What are tradable pollution permits?
A
A set o permits issued to the government to firms , enabling to determine how much firms can pollute. Pollution cap set by government at optimum level, in order to match cap.
2
Q
Supply for permits fixed or not fixed?
A
Fixed as it is inelastic
3
Q
Pros of pollution permits?
A
Reduction in CO2, initiatives to innovate
4
Q
Cons of pollution permits?
A
Enforcement, unintended consequences (increased cost of production), could leave the market
