The Biggest Difference Between Using a Pigovian Tax or a Tradable

question 109

Multiple Choice

The biggest difference between using a Pigovian tax or a tradable allowance to correct for a negative externality is:

• A) the government collect revenues from the tax, and the private parties trade quota rights on their own.
• B) the tax creates an efficient outcome, and the tradable allowances do not.
• C) the tax maximizes total surplus, but the tradable allowances do not.
• D) All of these are differences between the two government policies.

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