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Suppose we have one hundred different firms emitting pollution. The Ministry of the Environment and Natural...

Suppose we have one hundred different firms emitting pollution. The Ministry of the Environment and Natural Resource (MOENR) currently regulates these firms by requiring specific pollution control equipment to be installed by each firm. The MOENR is considering issuing tradable permits to each firm indicating how much pollution the firm may emit. Permits will reduce pollution in the same amount as the technology regulation. Discuss the implication of switching to tradable permits on the likelihood of seeing research and development to reduce the cost of pollution control.

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Rahul Sunny answered 2 years ago
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