The issue of tradable permits, or cap-and-trade schemes is a important one at the moment, and it is a relevant solution to negative externalities of production in the microeconomics section of the course. The basic idea is to set a limit (cap) on the amount of pollution and then divide this up into permits that …
At the moment in Malawi they are arguing about whether or ‘passing wind’ should be banned. Some of those in the government are effectively claiming that it is a form of market failure, and as such are proposing government legislation as a solution to this. The questions then arise as to how this could be …
One of the solutions to market failure that you need to understand is the use of tradable permits. The article explains how these work. It also explains that one of the major problems facing the schemes starting up at the moment is the international nature of the pollution problem. Pollution does not respect international boundaries, …
One solution that is proposed for solving market failure, and in particular a negative externality of production, is that of a system of tradable permits. This is something that has gathered some momentum as a result of the Copenhagen conference. One system that can be used is a market for ‘permits to pollute’ where firms …
The French government for a while was considering the introduction of a ‘carbon tax’ as a method to reduce pollution (a negative externality). It would now appear that this will not go ahead, with one reason being given that it would need to be an EU tax, otherwise French industry would experience higher costs while …
A number of businesses in Europe have been ‘ripped off’ recently by fraudsters who stole a large number of carbon permits. These are a very good example of ‘tradable permits’ that can be used as a market based solution to the negative externality of air pollution. The second site has a good explanation of how …