3940EconomicsMedium
Which of the following is true regarding tradable pollution permits and Pigouvian taxes?
AAll of these answers are true
BTo set the quantity of pollution with tradable pollution permits, the regulator must know everything about the demand for pollution rights.
CTradable pollution permits efficiently reduce pollution only if they are initially distributed to the firms that can regulator pollution at the lowest cost.
DPigovian taxes are more likely to reduce pollution to a targeted amount than tradable pollution permits.
EPigouvian taxes and tradable pollution permits create an efficient market for pollution.
Correct answer
E. Pigouvian taxes and tradable pollution permits create an efficient market for pollution.
Explanation
The correct answer is Pigouvian taxes and tradable pollution permits create an efficient market for pollution..