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 …
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 …