Economics A170 Lecture Notes - Lecture 4: Coase Theorem, A170 Road, Sulfur Dioxide
15 May 2020
School
Department
Course
Professor
Document Summary
Provide each producer a permit for a certain level of pollution. This is usually some percentage of historical rates. Firms have even more incentive to reduce pollution to sell unused permits. Other firms that do not find it cost effective to reduce pollution, buy permits. Firm"s willingness to pay for permits depend on its cost of reducing pollution. U. s. system institute in 1994 to reduce sulfur dioxide emissions that causes acid rain. Air pollutants in u. s. dropped by 40% from 1990 to 2008. 2010 acid rain levels dropped by 50% of 1980s level. Economists says it would have been 80% more expensive to obtain these results using non-market based system. Eu greenhouse gas system to reduce greenhouse gases by 21% of 2005 levels by 2020. Greenhouse gas trading or carbon trading grew from billion in. 2005 to billion in 2010 for the worldwide market. Industries pressure government to issue too many permits which effectively eliminates cap.
