Some Environmentalists Have Criticized Tradable Emission Allowances on the Grounds

question 41

Essay

Some environmentalists have criticized tradable emission allowances on the grounds that they give permit holders a license to pollute.Furthermore, environmentalists argue that those who sell their permits receive a monetary benefit from their contribution to polluting the environment.Use economic reasoning to evaluate this criticism.

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Definitions:

Multiproduct Cost Function

A Multiproduct Cost Function calculates the cost of producing different products within the same firm, taking into account the cost interactions between producing multiple products.

Economies of Scope

Cost advantages that a business experiences by producing a wider variety of products, as opposed to specializing in a single product or service.

Learning Curve

Graph relating amount of inputs needed by a firm to produce each unit of output to its cumulative output.

Average Costs

The total cost of production divided by the quantity produced, indicating the cost per unit of product or service.