Advantages: Benefit the environment in the long run, by encouraging firms to use green production methods., The government could raise revenue from the permits, because they can sell them to firms. This revenue could then be reinvested in green technology. , If firms exceed their permit, they will have to purchase more permits from firms which did not use their whole permit. This raises revenue for greener firms, who might then invest in green production methods. , Disadvantages: However, it could lead to some firms relocating to where they can pollute without limits, which will reduce their production costs., Firms might pass the higher costs of production onto the consumer., Competition could be restricted in the market, if the permits create a barrier to entry for potential firms, It could be expensive for governments to monitor emissions.,

Pollution Permits

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