Abstract
The idea of marketing permits to pollute and allowing controlled trading among polluters has been emerging recently as economic conditions have put environmentalists on the defensive. The author examines how marketable permits would work in terms of requiring a public policy decision on an allowable level of pollution and the degree of sophistication needed to establish a market system that allows for growth. He then points out the opportunity for political decisions, lawsuits, inadequate monitoring, and regional disputes to keep the system from working. Studies at the Resources for the Future found growth would dominate a permit market during periods of expansion, but plant closings and changes in the product mix would free up permits for trade if the owners are willing. The idea could improve pollution management if expectations are realistic and if the system contains some incentive for technical innovation. 17 references, 1 table. (DCK)
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