Why Are Taxes on Pollutants and Tradable Allowances Considered to Have

question 109

Multiple Choice

Why are taxes on pollutants and tradable allowances considered to have similar effects in solving externality problems?

• A) The companies who are taxed are also simultaneously subject to the allowances of pollutants.
• B) They both reduce pollution of exactly the same types of pollutants.
• C) They both bring markets closer to the efficient quantity.
• D) Companies can trade the taxes on pollutants just as they trade the allowances on pollutant amounts.

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Definitions:

Joint Venture

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task, project, or any other business activity.

Contractual Agreement

A legally binding agreement between two or more parties, outlining obligations and rights.

Strategic Financial

Refers to financial decisions, planning, and activities that are aimed at achieving a company's strategic objectives.

Joint Venture Operation

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task.