tradable permits

Suppose that the government decides to issue tradable permits for a certain form of pollution. a. Does it matter for economic efficiency whether the government distributes or auctions the permits? Does it matter in any other ways? b. If the government chooses to distribute the permits, does the allocation of permits among firms matter for efficiency? Does it matter in any other ways? 2. Some people object to market-based policies to reduce pollution, claiming that they place a dollar value on cleaning our air and water. Economists reply that society implicitly places a dollar value on environmental cleanup even under command-and-control policies. Discuss why this is true.