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ECON 1010 (102)
Lecture 59

ECON 1010 Lecture 59: Lecture 59

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ECON 1010
Laura K.Brown

o|82 1. Supply curve for pollution rights is perfectly elastic and the position of the demand cure determines the quantity of pollution 1. Environment Canada sets a quantity of pollution by issuing pollution permits 1. Supply curve for pollution is perfectly inelastic and the position of the demand curve determines the price of pollution 2. For any given demand curve for pollution, Environment Canada can achieve any point on the demand curve either by setting a price with a corrective tax or by setting a quantity with pollution permits 3. Selling pollution permits may be better than levying a corrective tax 4. Pollution permits are now viewed as a cost effective way to keep the environment clean 5. Emission permit trading systems (also known as cap and trade) are common throughout the world 6. Each firm can choose among three options: 1. Use all permits and emit the pollution allowed by the pollution permits o Use only a few pollution permits and sell the rest of the permits 1. Buy more pollution permits and emit more pollution th
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