Which of the Following Is a Difference Between Corrective Taxes

question 145

Multiple Choice

Which of the following is a difference between corrective taxes and tradable pollution permits?

• A)Corrective taxes are a market-based solution while tradable pollution permits are a command-and-control policy.
• B)With a corrective tax the government sets the price of pollution; with tradable pollution permits, demand and supply set the price of pollution.
• C)With corrective taxes firms pay for pollution; with tradable pollution permits firms do not.
• D)Corrective taxes internalize the pollution externality while tradable pollution permits do not.