Key Concepts and Summary
Examples of market-oriented environmental policies, also referred to as cap and trade programs, include pollution charges, marketable permits, and better-defined property rights. Market-oriented environmental policies include taxes, markets, and property rights so that those who impose negative externalities must face the social cost.
marketable permit program
a permit that allows a firm to emit a certain amount of pollution; firms with more permits than pollution can sell the remaining permits to other firms
a tax imposed on the quantity of pollution that a firm emits; also called a pollution tax
the legal rights of ownership on which others are not allowed to infringe without paying compensation