what-is-a-potential-drawback-of-using-pollution-permits-as-a-solution-to-externa

Question

What is a potential drawback of using pollution permits as a solution to externalities?

Accepted Answer

They can lead to market power if permits are concentrated among a few firms.

Answer

They always result in higher pollution levels.

Answer

They eliminate the need for any government intervention.

Answer

They are less flexible than command and control policies.