Answer to Question #214642 in Economics of Enterprise for Slayer

Question

Explain how an emissions trading scheme may reduce pollution

Answer 1

Emissions trading scheme may reduce pollution through setting a limit of number of emissions, and giving polluters some allowance corresponding to the limits and then permitting polluters to purchase and sell the allowances. This put polluters on their toes to look for cost-effective means of reaching the required reduction which reduce air pollution to noticeable level.