Trading Pollution: How Pollution Permits Paradoxically Reduce Emissions

In an effort to reduce pollution, the government tried two policy prescriptions under the Clean Air Act Amendments of 1990. The first-command and control-mandated that each power plant lower its pollution by a determined amount. However, different firms face different cost curves and, because information is dispersed, policymakers don’t always know those costs. The second policy prescription-tradable pollution permits-empowered firms to use knowledge of their cost curves to buy or sell pollution permits as needed. Under this policy, the invisible hand of the market helped discover the lowest cost way of reducing pollution.
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[@SubieSal]

yo i spent like 30 mins trying to figure this out readin my textbook and your 4 min video just explained it so much better than my textbook could. thank you

[@elliremi3154]

Shoutout to everyone involved in the making of the video! Thanks to all of you, I am able to pass my environmental economics class

[@Borzacchinni]

this was like a commercial for studying economics

[@sourabhjadhav7929]

I'll take 2 seconds and say I love you MRU !!!

[@MarginalRevolutionUniversity]

Thank you! We appreciate the kindness! -Roman

[@ericdh4184]

This is more of a legal or organization question more than an environmental question -- with cap-and-trade measures, what stops a business from saying they will emit XYZ amount of pollution and then keeping the factory silent for the entire year? Or, to phrase it differently, what would stop me from declaring to the federal government that I would emit 1000 lbs of pollution when I was only going to emit perhaps 200 lbs of pollution? I imagine that this forgery would be a great way to make some sort of permit mill and gain lots of money selling the rights to emit pollution where pollution was never going to be emitted in the first place.

[@seanbrown3000]

Problem not addressed: how does the government know what the proper quantity of pollution is? Going too high or too low are both inefficient.

[@vinaysharma1858]

Great editing. Great Content. Great Explanation. Proud to be a subscriber and part of the community.

[@MarginalRevolutionUniversity]

Much appreciated! -Roman

[@hvahidi7458]

Very easy to understand, thank you.

[@qjsharing2408]

The problem is that it gives an asset to someone that is already causing the problem, and knew they did. So a direct comparison to a pollution tax is reasonable. And then there's the politics of which one is easier to sell to the public

[@KTMGUY95]

Suppose Bangladesh and China actually had to reduce pollution? Cause right now we are just cleaning air while they continue to pollute more. This is a world issue. We all use the same air.

[@theecoheroes413]

We Care! We are Eco Heroes 🌍❤️

[@platoscavealum902]

👍 Thank you.

[@yomamasofat413]

OH YEAH

[@nietzsche7384]

HU HU ALRIIIGH

[@laizhou7352]

Great content

[@robindragirl]

thannnks!

[@danielbrooks3104]

Would you say that a pollution permit scheme is preferable to a pigouvian tax on carbon?

[@mknf5091]

Both are required actually

[@blind09]

And government loves it because they get all the power....incentive for more regulation

[@josephcadelina5580]

and anarchists hate government and all its regulations

[@teslatonight]

#ThisMatters More here: kzbin.info/www/bejne/hn7Uo5KrhZ2KsKM #JustTaxPollution

[@soakai4558]

fake run can't get sub 20 shout out tobiasss for the call out and the vod will be reported to admins xx

[@ioan_jivan]

Talk about jumping over steps and reaching a hilarious conclusion... Of course you can't reduce the same amount of pollution like that, you just reduce the pollution that is economically sound to reduce. This only takes into account the low term economical profits and ignores the possible social dangers.

[@EightToneSpanish]

I think it depends on the "cap" level set. So if you have weak governments in the hands of lobbiests and climate change deniers (or the got are deniers themselves!). Then they'll keep issuing permits which effectively allow corps to keep polluting as much as they want. But if they really implement at strict cap then they'll be able to reduce pollution in the most economic way. The cap is the key part. Of course though if all those savings are spent on fancy cars and holidays in distant climes, then there's no point!!

[@damiondaily5421]

First