The process of firms buying and selling the right to pollute is an example of which type of environmental regulation?Market-based.Control.Command.Emissions charges.
Question
The process of firms buying and selling the right to pollute is an example of which type of environmental regulation?Market-based.Control.Command.Emissions charges.
Solution 1
The process of firms buying and selling the right to pollute is an example of Market-based environmental regulation. This type of regulation is also known as "cap and trade" system. The government sets a limit or "cap" on the amount of a pollutant that can be emitted. Companies or other groups are issued emission permits and are required to hold an equivalent number of allowances which represent the right to emit a specific amount. The total amount of allowances and credits cannot exceed the cap, limiting total emissions to that level. Companies that need to increase their emission allowance must buy credits from those who pollute less. The transfer of allowances is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions.
Solution 2
The process of firms buying and selling the right to pollute is an example of Market-based environmental regulation.
Solution 3
The process of firms buying and selling the right to pollute is an example of Market-based environmental regulation.
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