BU383 Study Guide - Polluter Pays Principle
Document Summary
760 5 40 + 0. 25(40)2 = 400. This type of permit scheme where the permits are initially allocated for free to the firms has the lowest tcc of any of the policies considered. This fact combined with its low social costs (just like the effluent fee, the permits are cost effective) makes this policy appear quite attractive. From that perspective, giving away permits for free (known as grandfathering ) can be troubling. Under this type of permit allocation scheme, the polluter pays principle is satisfied.
