Chapter 3, Problem 48Q

Interpretation Introduction

Interpretation:

The cap - and – trade system has to be compared and contrasted with a carbon tax.

Concept introduction:

The Cap-and- trade means a government authority establishes a cap that limits the total amount of pollution allowed and then distributes permits for a right to pollute the global atmosphere, which can be traded as private property.

Carbon tax is a form of pollution tax. A fee for greenhouse gas pollution and this tax makes using dirty fuels more expensive.