Which of the following is not a characteristic of pollution permits?
a. |
Real-world markets for pollution permits include sulfur dioxide and carbon. |
|
b. |
Firms for whom pollution reduction is very expensive are willing to pay more for permits than firms for whom pollution reduction is less expensive. |
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c. |
Prices are set by supply and demand. |
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d. |
Allowing firms to trade their permits reduces the total quantity of pollution beyond the initial allocation. |
Answer
Option d
Allowing firms to trade their permits reduces the total quantity of pollution beyond the initial allocation
the pollution permits to reduce the total quantity equal to the number of permits issued and not more or less as that quantity is allowed to pollute.
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