Cap and Trade Follows Free-Market Principles

Summary

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When environmental economists look at policies for reducing any type of pollution we usually consider three alternatives: regulations, emissions charges and tradeable discharge permits.

Regulations were the earliest and remain the most common alternative implemented at all levels of government. They imply that polluters are bad and need to be stopped. However, with regulations we spend way more for the reduction achieved than is necessary.

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Extract

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Cap and Trade Follows Free-Market Principles

The other two alternatives use monetary incentives to induce pollution reduction. They were originally developed by free-market advocates who saw them as preferable to government intervention through regulatio...

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