Principles of Microeconomics / Unit 11 MIC 1009 short lesson, about 20 seconds
Marketable Permits
Captions available
The idea
Under marketable permits the government caps total pollution, issues permits for that total, and lets firms trade. The cap fixes quantity; trading sends abatement to whoever does it cheapest.
In practice
A cheap abater cuts more and sells spare permits to a dear one.
Where people slip
A charge fixes price, quantity varies; a cap fixes quantity, price varies. Both find least-cost abatement.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
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