Answer to Question #34432 in Economics of Enterprise for James

Question

What is the rationale behind a tradable emissions allowance scheme?
a. to create a market for externalities: the scheme brings together buyers and sellers of
marketable permits
b. to raise revenue for the government through the sale of emission permits and at the
same time set an emissions target
c. to provide firms with the incentive to consider less costly alternatives to pollution
reduction by making firms pay for the right to pollute beyond their specified allowance
d. to discipline polluting firms by specifying the maximum amount of emissions allowed
and giving them permits to pollute up to their allowance