Tradeable Permits

Tradeable permits are a market-based approach for controlling pollution or resource use. The government issues a set number of permits, each allowing a company to emit a certain amount of pollution or use a specific resource. Companies can buy or sell these permits depending on their needs. If a company emits less than its permit allows, it can sell the excess permits to others. This system encourages companies to reduce pollution efficiently, as those with lower costs to cut emissions can profit by selling permits, while overall pollution stays within the established limit.